The Australian Taxation Office (ATO) has announced a major change that will impact thousands of businesses across the country starting from April 1. In a move dubbed a “massive” shakeup, the tax office will require certain businesses, particularly those earning under $20 million annually, to submit their Business Activity Statements (BAS) monthly instead of quarterly.
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Why This Major Change is Happening
Under the current system, businesses with a turnover under $20 million are allowed to submit their BAS every three months. However, the ATO has identified a worrying trend: businesses failing to make timely payments, submitting late BAS, or inaccurately reporting their Goods and Services Tax (GST). As a result, approximately 3,500 businesses will be required to transition to monthly reporting starting in April.
The ATO believes that this change will help businesses stay on top of their tax obligations and reduce the risk of falling behind. “Running a small business is serious business – so it pays to keep on top of your tax obligations,” said ATO Deputy Commissioner Will Day. “When GST is reported monthly, rather than quarterly, it reduces the risk of falling behind.”
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The Impact on Small Business Owners
This new rule will affect a wide variety of business owners, from contractors and subcontractors to self-employed individuals, ride-share drivers, and more. Businesses that fall under this new monthly reporting requirement may find themselves spending up to four hours every reporting cycle just to prepare the necessary figures for their BAS.
Tax Invest Accounting director Belinda Raso voiced strong concerns over this additional burden on small business owners, particularly in the midst of a cost-of-living crisis. “That is additional time and additional money,” Raso said. “When you process it yourself, you’re going to be away from your business, and when you engage a tax agent or BAS agent, there’s still going to be a minimum charge.”
With businesses already dealing with various challenges, Raso believes that forcing them to comply with these new monthly requirements without sufficient notice could cause unnecessary strain. She called on the ATO to adopt a more gradual approach, offering a longer adjustment period and more consultation with affected businesses.
How the ATO Plans to Address the Situation
A spokesperson for the ATO stated that the 3,500 businesses impacted by the changes will be notified in writing, and they will be required to comply with the new monthly system for at least 12 months. This policy is aimed at reducing the administrative burden in the long term and ensuring businesses stay on track with their tax obligations.
“We recognise most small businesses try to do the right thing,” said ATO Deputy Commissioner Will Day. “Our goal is to help small business owners get their tax and super obligations right by providing transparency on the areas we are focused on. The ATO has a responsibility to level the playing field, as small business owners rightfully expect us to ensure fair competition and compliance.”
Growing Concerns Over the Threshold for GST Reporting
In addition to the new monthly reporting requirements, Raso expressed concern about the low threshold for GST registration, which currently stands at $75,000 per year. This figure, which hasn’t been adjusted since 2007, would be worth around $120,000 in today’s dollars. Many small business owners find it challenging to make a living under this threshold, and Raso argues that the ATO should raise it to provide businesses with more breathing room.
“The $75,000 per year is nothing,” Raso said. “It’s not enough for you to live on. And when you take into consideration all the people that are just getting caught under this, it’s just one hit after another.”
Call for a More Balanced Approach
As the ATO moves forward with these changes, there is a growing call from small business advocates for a more balanced approach to tax compliance. The sudden shift to monthly BAS submissions could create further hardship for businesses that are already struggling. Experts suggest that the ATO should be more lenient and offer businesses additional time and resources to meet the new requirements.
With these sweeping changes coming into effect in just a few weeks, the ATO’s decision to enforce monthly BAS submissions raises important questions about fairness and the challenges faced by small businesses in Australia.
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