Quickstart Australian BAS

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Doing my BAS with GnuCash

Doing my quarterly [BAS] returns to the [ATO] is easy. Because I have set up my accounts and transactions correctly and accurately, the tallying up and submission of BAS takes me a few minutes only each quarter.

First, I have GnuCash set up to track my accounts. Consider the common situation whereby I have a bank account, a home loan, regular business income (collecting [GST]) and regular business expenses (paying GST). The BAS activity aims to tally up all the GST charges and payments over a quarter, calculating the difference, and submitting it to the ATO.

My account set up

My accounts are set up as follows:

  • Asset:Bank (Asset)
  • Asset:House (Asset)
  • Liability:Home Loan (Liability)
  • GST:GST on Sales (Liability)
  • GST:GST on Purchases (Asset)
  • GST:GST claims on BAS (Asset or Liability)
  • A/Receivable (A/Receivable)
  • A/Payable (A/Payable)
  • Income:Sales (Income)
  • Expense:Office (Expense)
  • Expense:Service Fee (Expense)
  • Expense:Groceries (Expense)
  • etc

My Tax Tables

I use two tax tables -- GST on Sales, GST on Purchases.

Both tax tables have only 1 entry each -- GST on Sales (10%, linking to GST:GST on Sales), GST on Purchases (10%, linking to GST:GST on Purchases).

Some users may require more tax tables eg. Reduced GST on Sales, Reduced GST on Purchases, GST-free sales etc. These may link to the same GST accounts as above, or to different ones eg. GST:Reduced GST on Sales, GST:Reduced GST on Purchases, GST:GST-free sales. We'd expect the GST:GST-free sales account to include splits with $0 GST.

The tax tables are useful in generating invoices and calculating GST automatically.

How do I record everyday transactions?

First, I regularly update the bank account from my day-to-day transactions. For instance, spending $10 on groceries would involve a transaction as follows:

 25/09/2020 Buying Groceries
 Asset:Bank -$10
 Expense:Groceries +$10

Conversely receiving $200 on GST-free sales is recorded as follows

 29/09/2020 Sales
 Asset:Bank +$200
 Income:Sales -$200

Note the income amount is typically negative.

How do I record business transactions (includes GST tracking)

Business transactions typically involve GST being collected and paid and must be tracked as such.

Consider I purchased $200 insurance, plus $20 GST. This $20 GST is claimable. I want to track it.

 01/10/2020 Annual insurance premium
 Asset:Bank -$220
 Expense:Insurance +$200
 GST:GST on Purchases +$20

Conversely, I have generated sales of $2000, and collected $200 GST. The GST must be remitted to the tax authorities.

 02/10/2020 Cash Sales
 Asset:Bank +$2200
 Income:Sales -$2000
 GST:GST on Sales -$200

How do I record business transactions using business features i.e. accrual accounting?

Accrual accounting recognises that posting sales and getting paid may occur on separate transactions. Note the initial transfer to A/Receivable or A/Payable must be created using business features i.e. invoices or bills.

 05/10/2020 Accrual Sales
 A/Receivable +$110
 Income:Sales -$100
 GST:GST on Sales -$10

Receiving funds later:

 25/10/2020 Accrual Sales Receipt
 A/Receivable -$110
 Asset:Bank +$100

Or the customer disputes the invoice, and the owner decides to write off the debt:

 25/10/2020 Bad Debt
 A/Receivable -$110
 Expense:Bad Debts +$100
 GST:GST on Purchases +$10

Note the GST split exists in the invoice/bill posting transaction; the payment transaction does *not* include a GST split.

How do I record complex business transactions?

A complex business transaction may record additional splits, e.g. I invoice the client for $8000 + $800 GST, using a broker who charges 20%+GST. My income is $6240.

 09/10/2020 Complex Sales
 Asset:Bank +$6240
 Income:Sales -$8000
 GST:GST on Sales -$800
 Expense:Service Fee $1600
 GST:GST on Purchases $160

Reporting the Business Activity Statement

Regularly, I will need to tally all GST collected and paid in the past period; e.g. the Q4 BAS will regard all GST activity from 01-October to 31-December. In the above example, I have collected $1,080 GST on sales, and paid $180 GST on purchases so far. The difference $830 must be remitted to the tax office.

Option 1 – Use Transaction Report

The versatile Transaction Report can be used to select the source accounts GST:GST on Sales and GST:GST on Purchases, limiting the dates from the start of last quarter to the end of last quarter, and reviewing the report which would specify:

Debit Credit
GST on Sales
02/10/2020 Cash Sales $200
05/10/2020 Accrual Sales $10
09/10/2020 Complex Sales $800
Total for GST on Sales $1,010
GST on Purchases
01/10/2020 Annual Insurance premium $20
09/10/2020 Complex Sales $160
Total for GST on Purchases $180
Grand Total $830

The grand total $830 is to be sent to the tax authorities.

Option 2 – Use the Income and GST Statement

This report is designed to calculate amounts from GST. You can select the source accounts Income:Sales and Expense:Office, Expense:Service Fee etc, and the tax accounts GST:GST on Sales, GST on Purchases

Date Desc Gross Sales Net Sales Tax on Sales Gross Purchases Net Purchases Tax on Purchases
01/10/20 Annual Premium $220 $200 $20
02/10/20 Cash Sales $2,200 $2,000 $200
05/10/20 Accrual Sales $110 $100 $10
09/10/20 Complex Sales $8,800 $8,000 $800 $1,760 $1,600 $160
Total $11,110 $10,100 $1,010 $1,980 $1,800 $180

This tabular view will sum all columns involved. The total tax collected is $1,010 and total tax paid is $180. Submission of gross sales $11,110 and the GST values to the ATO results in the difference $830 being payable.