business activity statement
What is business activity statement?
BAS – Business Activity Statement is a report that summarizes the financial business activity of a business for a period of time set by the ATO.
The taxation system is build in such a way that the TAX authorities does not want to wait for the business to end its life cycle in order to collect Taxes. Instead, the TAX authorities want to look at a business ongoing situation and TAX along the way.
When we look at a company life cycle there is all sort of stages along the way. from startup to closer. along this time line a company trades and act to achieve max revenue. by trading and doing “business” selling a product or a service and counting for all the transaction. if the TAX authorities would have to wait for the entire cycle to be complete, they might never get any taxes collected, as it may take decades for the cycle to complete.
The tax system is constructed in a way that a company must report for the tax it’s net earnings every year and pay tax on that amount. by using this system, the ATO doesn’t need to wait years to collect the tax. Instead, create an ongoing account where he keeps a tab if you like on what happened in the period. Taking into consideration the opening balance from the last period as the starting point.
When using this way the only way a business can “lose” money to the tax system is if he makes profits from day 1, and make losses before closer. because he will pay tax on it’s profits, but won’t be able to deduct it’s loses as the company will be going for an administration.
The Business Activity Statement is the monthly/Quarterly/Yearly report that sum up what we have financially done in the business. It states who we paid, what we bought and the wages for the period. this is constructed in an aim of giving the ATO the chance to manage its overall budget. the ATO also make sure that it’s collection is up with an overall adjustment of the budget. because if there is a deficit in the collection, the government might raise taxes and vice versa.
To sum up:
The Business Activity Statement is crucial for the ongoing of our country. because without the taxpayer money the country can’t afford public services like border security, police, infrastructure and many public services that are needed to support the nation well beings.