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The ATO’s Simpler BAS means compliance will get even easier for small businesses using Xero

Posted 3 years ago in Small business by Tim Wright
Posted by Tim Wright

Many of you will have heard of the ATO’s plans to make it easier for small businesses to complete their BAS (Business Activity Statement) with a Simpler BAS. As the ATO start to release details around Simpler BAS, we thought it’s a good time to let you know how we will keep you up to date with these changes. If you haven’t heard of it yet, fear not as the ATO will be in touch with more details soon!

What is Simpler BAS?

Simpler BAS will reduce the number of GST labels that you have to complete when you report GST to the ATO. With Simpler BAS you will only need to complete:

  • G1 for your total sales
  • 1a for the GST amounts you collected
  • 1b for the GST amounts you’ve paid

The other G fields previously required including: Export Sales (G2), other GST Free Sales (G3), Capital Purchases (G10) and Non-capital Purchases (G11) are no longer needed.

The calculation worksheet method used to determine the amounts to report on the BAS isn’t needed with Simpler BAS either.

Some people will also have other obligations they have to report on the BAS such as: Pay as You Go instalments (the T fields), Pay as You Go withholding (the W fields) or other taxes such as Luxury car tax, Fuel tax credits or others. If you have additional reporting obligations, you’ll report them on your Simpler BAS, just as you did before.

If you haven’t heard from them already, the ATO will be providing more information so keep watch on your email inbox or check out their website.

How are we supporting the change to Simpler BAS in Xero?

We’re developing a whole new BAS experience in Xero to support Simpler BAS and future enhancements. The new BAS also removes the calculation worksheet we no longer need (this is great news for people that have non 10% GST rates).

The new BAS will also give us a strong foundation to deliver our future roadmap plans including supporting direct filing of the BAS to the ATO from Xero and other improvements to make BAS time even easier.

If you still want to use the existing BAS, don’t worry – it will still be available for the time being. As we continue to build out the functionality of the new BAS, we’ll consider when to retire the existing BAS, and keep you updated.

Basic GST Rates

Given the ATO no longer wants such itemised GST information, this also reduces the need to have so many GST tax rates in Xero. To make it easier in Xero, we’ll let you choose if you want Basic GST Rates. This will leave you with a basic set of Basic GST Tax Rates to use on transactions and identify whether it’s BAS Excluded, GST Free or GST. We’ll archive the more detailed rates neither you or the ATO need including: Input Taxed, Export Sales, GST on Capital, GST Free Capital and more.

If you choose to use Basic GST rates, we’ll take care of the mapping for you on things like Chart of Accounts, Contacts, Items, Bank rules, Repeating Transactions, Journals and more. We won’t update any transactions you’ve already posted in Xero and there’s no need for you to change them either.

Whether you use the new BAS or the original BAS, you can use the Basic GST rates or the original Full rates.

When will all this happen?

Rest assured we’ll have Simpler BAS in the Australian editions of Xero ready for you to do your first Simpler BAS. Basic GST rates should be available for you to choose to start using for the new Financial Year in July.

If you’re not sure what this means for you and how it might affect how you use Xero, connect with your Xero Certified Adviser. As a Tax or BAS agent,  they’ll be able to support you with your GST and BAS needs with a personalised Xero expertise. If you don’t have a Xero certified Adviser, now’s a great time to connect with one to make the most of the changes.  

We’re really excited about our plans to make BAS time painless for you and we’re planning to get cracking on that next!

Stay tuned for more announcements, as we get closer to the start date of Simpler BAS we’ll give you further information.


Charles Klvana
June 15, 2017 at 8.14 pm

Can you please details EXACTLY which GST tax rates will be going and what they are mapped to. All that has been mentioned is; Input Taxed, Export Sales, GST on Capital, GST Free Capital and more. What’s the “and more”?

Tim Wright in reply to Charles Klvana
June 16, 2017 at 5.42 pm

Hi Charles,
Yes, we were trying to keep the detail to a minimum here and we’ll be running some webinars for partners with the full detail and information on Simpler BAS and basic GST rates soon.

The basic GST rates list for those that want to use for Simpler BAS reporting will be
  – GST on Income
  – GST on Expenses
  – GST on Imports
  – GST Free Income
  – GST Free Expenses
  – BAS Excluded

The mapping we apply ensure the right reporting outcome on the Simpler BAS. But if people want to keep Advanced Rates they’ll be handled appropriately on the Simpler BAS as well.
The Advanced Tax Rates that will be archived when changing to basic rates (and the mapping) :
  – GST on Capital is archived and maps to GST on Expenses
  – GST on Capital Imports is archived and maps to GST on Expenses Imports
  – GST Free Expenses is archived and maps to GST Free Expenses
  – GST Free Capital is archived and maps to GST Free Expenses
  – GST Free Exports is archived and maps to GST Free Income

Input taxed mapping is a little more involved because it’s handling on the Full BAS is dependant on account types etc.
Input Taxed is archived and mapped to :
  – GST Free Income when used on revenue accounts or a contact sales default
  – GST Free Expenses when used on expense accounts or a contact expense default
  – BAS Excluded when used on all other accounts

All existing AU customers organisations will have an option to change to basic tax rates via a button in the tax rates area of Xero.
All new AU organisations from release will have basic rates automatically. They can change to advanced rates if they need to.
We’ll let partners know first when this is available, so they can advise their clients on the right course of action for them.

Hope that helps, but there’s more to learn so please join us for the webinar, details coming soon to an email inbox near you:-)

Diane Oliver
June 19, 2017 at 4.55 pm

I’m seeing conflicting information regarding the Simple BAS.

It was my understanding that we no longer use the GST Free Expenses and GST Free Income tax codes, but Bas Excluded. Which is what forms the “Simple BAS”. The GST free income will be pulled from the PL and included in the Total Sales on the BAS.

But reading your comments above, it appears we still need to use GST Free Expenses and Income. Is this correct?

The basic GST rates list for those that want to use for Simpler BAS reporting will be
– GST on Income
– GST on Expenses
– GST on Imports
– GST Free Income
– GST Free Expenses
– BAS Excluded

Tim Wright in reply to Diane Oliver
June 20, 2017 at 2.38 pm

Hi Diane,
Simpler BAS is a reduction in the GST related items that need to be reported on the BAS. Simpler BAS is the same BAS as you’d get with GST option 2 today, without the annual report and no need for the GST calculation worksheet.

Whats important to remember with Simpler BAS is that:
  a) the underlying GST legislation is unchanged and
  b) not everyone will move to Simpler BAS

For many GST free will still be a ‘thing’ they experience and hear in their everyday lives, just as it is today (eg some beds or medical services are GST Free, importing good from overseas and customs valuations, fresh goods vs processed/manufactured goods etc).

The fact these types of expenses don’t need to be reported on the Simpler BAS is fine. Whether someone uses GST Free Expense or BAS Excluded will result in the same reporting outcome on the Simpler BAS. The key is that they don’t need to change what they do today to meet the reporting obligation.

Xero will continue to obtain amounts for BAS GST labels from the use of tax rates, this includes GST Free Income amounts which needs to be included at G1. There’s no requirement we’re aware of for us (or any software developer) to retrieve GST Free income amounts from the PnL and not be able to use a tax rate to achieve the right outcome.

Whilst GST Free concepts continue to exist in the GST legislation, some businesses still need to identify all kinds of GST Free amounts (income and expense) on the Full BAS as well as just GST Free Income on the Simpler BAS. Things in public life will still carry GST Free labels too, so we felt removing GST Free type tax rates or changing how amounts are retrieved to the BAS would be unnecessarily complicated for people and cause confusion.

People can choose to retain their full ‘advanced’ tax rate list as well if they want to (for many they’ve set up automation and processes that will cost more to change from); they will also be handled correctly on the Simpler BAS. The key point here is to meet the Simpler BAS reporting change, there does not HAVE to be a change in the tax rates you allocate transactions. For some the Basic rates will be beneficial and help them simplify their bookkeeping, for others they should stay as they are. If anyone is unsure whats best for them, we’d recommend they speak to their Xero certified advisor.

What we’re aiming to do at Xero is make the changes as simple and easy to understand and adopt as possible, reducing confusion, uncertainty and minimising a ‘big bang’ change.
It’s early days, we’ll keep listening to feedback as people get used to what and how they want to do it, and from that we can look at further improvements for people. People using Xero should find picking up Simpler BAS ‘simple’ and we aren’t looking to introduce complexities that make it any harder than it needs to be.

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