The ATO’s “GST-light” offer for new small businesses

The ATO says that it has “listened to the concerns of small businesses, tax professionals, industry associations and software providers”, and is working towards reducing GST compliance costs for small businesses.

“We are reducing the amount of GST information required for the business activity statement (BAS) to simplify GST bookkeeping and reporting requirements,” it says. “A simpler BAS will give small businesses time and cost savings by simplifying account set up, GST bookkeeping and BAS preparation. Businesses will be able to more easily classify transactions and prepare and lodge their BAS.

It has therefore announced that, from January 19, 2017, newly registered small businesses will be provided with the option to report less GST information on a simpler BAS.

To take advantage of this option, your small business clients that register for GST from January 19 will need to do the following:

  • If a quarterly GST reporting cycle is selected when registering for GST, they will need to select “Option 2: Calculate GST quarterly and report annually” on their first BAS. The ATO says it will not be seeking the additional GST information or lodgment of the “annual GST information report”. This will provide your small business client with a simpler BAS reporting solution.
  • If a monthly GST reporting cycle is selected at registration, you can insert “0” at G2, G3, G10 and G11 on your client’s BAS.
  • If an annual GST reporting cycle is selected, you can leave G2, G3, G10 and G11 blank on your client’s annual GST return.

Note also that from July 1, 2017 small businesses will only need to report the following GST information on their BAS:

  • GST on sales (1A)
  • GST on purchases (1B)
  • Total sales (G1).

The requirement to report export sales (G2), other GST free sales (G3), capital purchases (G10) and non-capital purchases (G11) will also be removed.

“We have commenced testing the proposed changes with small businesses, tax professionals and software developers to ensure we get it right,” the ATO says. “The Phase 1 Alpha testing report outlines the findings and recommendations from the user testing.”

You can view the full testing report on the simpler BAS software developer webpage, and for more guidance for your small business clients, see the following video.

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