How is business tax collected?

Question 1 of 5

Business activity statement

A business uses a business activity statement (BAS) to report and pay its tax obligations. The format of the BAS is personalised according to the business situation and any options the business has previously selected.

A business can lodge and pay tax electronically, or lodge their tax information by using a form. Businesses must report on time to avoid interest and penalties.

The following taxes are detailed and amounts collected on the BAS:

  • GST collected and paid out
  • pay as you go (PAYG) instalments –  an estimated amount of your tax liability for the year on business and investment income.
  • pay as you go (PAYG) withholding –  the amount you withhold from payments to employees, contractors and company directors. A business may also have to withhold from payments to other businesses if they do not quote their ABNs.
  • other taxes, depending on the nature of the business.

A business that is not registered for GST does not collect GST and cannot claim GST credits, but uses an instalment activity statement to account for the other taxes listed above. An instalment activity statement is also used by individuals who need to report their PAYG instalments.

  • Fact 23

    Social activities among ATO employees in the 1960s included 'Miss Taxation' contests which were part of state-wide fundraising for major charities.

Refund

An amount paid back by the ATO to a taxpayer when the taxpayer has paid more tax than they are liable to pay.

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