ATO’s New GST Rule Could Cost Small Businesses Thousands – Here’s Why

Small business owners in Australia will soon face significant changes in how they report their Business Activity Statements (BAS).

The Australian Taxation Office (ATO) has quietly announced that businesses with a history of late payments, incorrect reporting, or failure to lodge BAS on time will be required to submit their reports every month instead of quarterly.

This change, set to take effect on April 1, is expected to impact a significant portion of small businesses, including contractors, self-employed individuals, and rideshare drivers.

Increased Compliance for Non-compliant Businesses

Under the new rules, most businesses earning under $20 million per year will continue to report their BAS quarterly. However, those who have failed to meet BAS deadlines, made incorrect GST reports, or missed payments will be required to report monthly.

According to Belinda Raso, director of Tax Invest Accounting, the change could impact as much as 30% of her clients, forcing them to spend additional time and money on compliance.

“It doesn’t seem very fair that they’re to be hit like this, especially in a cost-of-living crisis,” she told Yahoo Finance.

For businesses managing BAS themselves, the shift could mean up to four hours of extra work every reporting cycle. If they hire a tax or BAS agent, they will face additional service fees.

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The ATO’s Justification

The ATO argues that businesses affected by the change have a history of non-compliance and that moving to monthly reporting will help them develop better financial habits.

“The move is designed to support you to meet your obligations and to embed good business habits into your business by better aligning reporting with your reconciliation processes,” an ATO spokesperson said.

ATO Commissioner Rob Heferen emphasized that small businesses owe $24 billion in BAS-related debt and that the new system aims to help businesses stay on top of their financial obligations.

“We are seeing an increasing number of businesses fall behind on these types of payments, from which point it is very difficult for businesses to get back on top of their obligations and remain viable,” he explained.

Concerns over the Lack of Consultation

Critics argue that the ATO has failed to consult small business owners before implementing the change. Belinda Raso believes the shift should have been introduced gradually, allowing businesses time to adjust.

“Why aren’t we actually working with those businesses and saying to them, ‘Just for a 12-month period, make sure that your BAS is on time’?” she questioned.

There are also concerns that this change is just the beginning. Some fear the ATO could eventually move all small businesses to monthly BAS reporting, regardless of their compliance history.

Calls for GST Threshold Review

Another major concern is the $75,000 annual GST registration threshold, which has remained unchanged since 2007.

Raso argues that this figure is outdated and should be raised to reflect inflation.

“In today’s economy, that figure would be closer to $120,000,” she said. “$75,000 per year is nothing. It’s not enough for you to live on.”

Businesses affected by the change will receive formal ATO notifications starting next month. While the agency insists that monthly BAS reporting will simplify tax compliance, small business owners remain skeptical about the benefits.