Both tax returns and Business Activity Statements (BAS) are important for business owners to complete and lodge by their required due dates. Each, however, serve their own purpose, providing specific information to the ATO. But both require some similar information regarding income, expenses, and GST.
Should I put income and expenses on both my BAS and income tax return?
Both your BAS and Income Tax Return require you to disclose your income and expenses when you fill them out. However, they both require the information for different purposes, and so, will require you to fill each out uniquely.
While the purpose of BAS is to report the GST component of transactions, Tax Returns are meant to finalise the tax on your business income.
When you fill out your BAS you should include your income and expenses with the amount of GST included in the value. This is known as gross income/expenses. So, for example, after earning $11,000 gross and having $3,300 gross expenses you would enter those figures as is into your BAS. That is because those figures refer to your $10,000 net income plus $1000 GST, or $3,000 net expenses with $300 GST.
On the other hand, when you fill out your Income Tax Return you would include your income and expenses exclusive of GST. That would be your net income or expenses. So, with the previous example you would enter your $10,000 net income and your $3,000 net expenses.
Why do they need to be filled out differently?
Each are for a different type of tax and so, serve very different purposes. This means that you are not claiming twice when you enter your expenses in both. You are lodging a BAS to reconcile the GST you have collected on behalf of the government against the GST you have paid. On the other hand, your income tax return is designed to work out the amount of tax you will need to pay on your income, and it is based on your business’ based on your profit or loss.
The best way to ensure that you have done your BAS correctly is by lodging it with BAS Lodge. We are registered tax agents, so will help you get it right before it is lodged to the ATO. It is quick, easy and stress free. If you have any more questions, feel free to give us a call or fill out our contact form.