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A bookkeeping firm has taken aim at the new Simpler BAS provisions over a month following its introduction, stating that it is “not as simple as the ATO make it out to be”.
Simpler BAS blasted as 'not so simple'
20 September 2017
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5 minute read
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Carbon Group managing partner Jamie Davison has questioned the ATO’s introduction of Simpler BAS and whether it has actually reduced red tape facing small businesses.
The ATO rolled out Simpler BAS on 1 July 2017 as the default method for small businesses with a GST turnover of less than $10 million, with the need to only report on G1 total sales, 1A GST on sales, and 1B GST on purchases.
Further GST information such as G2 export sales, G3 GST-free sales, G10 capital purchases, G11 non-capital purchases are no longer required.
However, Mr Davison believes bookkeepers and business owners have not stood to benefit much from the changes.
“It seems like in the background, you still have to calculate all the things that you did before but all you’re doing is filling out less fields, but to arrive at those fields you still have to do everything as you did before,” said Mr Davison.
“The end product is that you’re just filling in less but to arrive at the end product you still have to calculate everything else anyway.
“We’re finding that it probably takes longer to do the Simpler BAS than what it takes to do the traditional way.”
While the changes were aimed at reducing the complexity of GST bookkeeping for small businesses, Mr Davison said he has yet to notice its impact.
“It hasn’t really made a difference for businesses and we haven’t seen any clients leave and say, ‘now the BAS is simpler we’ll just do it ourselves’,” he added.
“I would’ve thought that might have happened but it hasn’t even appeared in any small business’ radar at this stage.”
Further, Mr Davison believes the ATO’s decision to change its portals during the introduction of the Simpler BAS has added to the frustration felt by bookkeepers on the ground.
Institute of Certified Bookkeepers executive director Matthew Addison was similarly critical of the ATO’s delivery.
“Efficiency will occur when the ATO deliver their promise of co-designed features of business and intermediaries interacting with the ATO, be it through the promised enhanced business and agent portals or be it through a far better set of ATO services delivered through business software,” Mr Addison said.
“Every time the ATO releases these “features” without proper co-design they create a nightmare for tax practitioners and businesses.
“[The Simpler BAS] concept is exactly right and delivers a better GST reporting system, however the ATO portal delivery created confusion and extra work and their SBR delivery has not been smooth.”
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- As a tax agent, if we receive the information from a client to process their BAS we cannot simply request a total of what the GST was for the period as well as the sales as this is not enough information to review the accuracy of what the client has provided.
The claim that a client only has to say if a transaction has GST on it or not is absurd as many of the items they pay for being home insurance, groceries, personal gas and electricity and many others all include GST but are not able to be claimed in their BAS.
At a minimum we need to review each transaction and ensure it is allocated to the correct income/expense/asset/liability account. This allows us to assess the tax consequences of the transactions and decide whether the GST is split correctly on these transactions.
The information provided for the BAS is then also used to help create the financial statements and tax returns, so if a client only provided GST totals for the BAS, they would still need to prepare a breakdown of the income and expenses at the end of the year as well as the GST split on these items to ensure the information in the financial statements is correct.
As we have to complete these checks whether the client uses the simplified system or not, the only change from our side is not having to fill in 3 boxes on the BAS which is a 5 second process.
From the clients side they still have to allocate each transaction to what they think it the correct account and select a GST code so there is no change to their requirements either.0 - I disagree. Yes there are less fields but that's not where the big differences are. Now clients only have to say whether something has GST in it or doesn't. It doesn't matter why it doesn't so that makes it significantly easier from a bookkeeping perspective. I worked with the ATO on this and at no point was it designed to encourage businesses to move from their accountant/BAS agent doing their BAS's but it's designed to make the processes involved simpler if you want to. Depending on your client base this can make their lives significantly easier. Have a look at this video where I (and others) explain where the benefits are for us as practitioners and our clients tv.ato.gov.au/ato-tv/media?v=bd1bdiub5oamau
I say give it a go and then judge. Don't judge the simpler BAS on the change of portals in late June as that was just a debacle and totally unrelated - despite what some commentators might be saying.
0 - I agree with all of the previous comments. We are still using the old format as it enables efficient reconciliation between Bas's lodged and end of year accounts. This is particularly useful where the client self prepares the Bas's.0
- Greetings all. We at Institute of Certified Bookkeepers believe the concept of the SimplerBAS is what GST reporting should always have been. GST or NOT. Unfortunately we haven't got that in some software delivering G1 simply but maybe we will get their.
For businesses that are used to more complex coding (and if they understand at all) and for intermediaries that are used to reviewing the GST reports based on the historic 9+ codes it is easier to stay with those codes.
Even with those 9+ codes what simplerbas reporting gives is an ability for your review process to change so that you dont have to change Fre to N-T/Excluded, you dont have to change GST to CAP. These changes added to value to anything ie it didnt change your GST liability but if you reported it incorrectly you werent lodging a "true and correct" report. etc etc
So we do see a benefit for existing processes and procedures.
One real win is for explaining GST to the business people who really dont want to understand the complexities of GST. The Agent can consider the business and apply the complex law and then have the Business people have an understanding of charging GST or Not or claiming GST or not.
In my ideal world the software will enhance the anomaly reporting and provide quick reports about when GST has been charged in a circumstance that looks wrong. So our review procedures will be different but hopefully more effective.
I also see that for new businesses it will be easier to adopt a simpler coding.
It is a new way to think. We have trained ourselves over 17 years to have a range of GST codes and to review the BAS based on these codes. It is a change to our thinking.
0 - Totally agree, we have decided for the clients we manage as a whole from bookkeeping to final year end tax reporting and CFO services to remain on Old Format as information at a glance and offer a quicker review process0
- We have a team of 20 and this has not changed our load at all so totally agree ie no change on workload at all.0
- The "Simpler" is not any simpler and, I believe, removes good accounting/bookkeeping practices that were introduced with the GST in year 2000 to assist small business. As a CPA I recommend all small business stay with the current format as all good bookkeeping software such as Xero & MYOB caters very easily for it.0
