Do Churches Need to Lodge a BAS?

It is one of the most common questions we hear from Church treasurers, and the answer is more encouraging than most people expect. A Business Activity Statement, or BAS, is not something every Church has to lodge. Having an ABN does not trigger it. What actually matters is whether your Church is registered for GST.

Getting this right saves a volunteer treasurer hours of unnecessary work, and getting it wrong can mean backdated liabilities and penalties. 

What a BAS actually reports

A BAS is the form you send to the ATO to report and pay tax obligations in one place. For most Churches, only two of those obligations are relevant: GST and PAYG withholding (the tax you hold back from wages and stipends). If neither applies to your Church, there is no BAS to lodge.

The key point: an ABN on its own creates no BAS obligation. The triggers are GST registration and PAYG withholding registration. Everything below flows from those two.

The GST test for Churches

If you are registered as a not-for-profit, your Church can obtain a higher GST registration threshold than an ordinary business (through the GST concession registration). You are only required to register for GST once your annual turnover reaches $150,000 or more, compared with $75,000 for commercial businesses. Many small and mid-sized congregations sit comfortably below that line and are not required to register at all.

What counts towards the $150,000

Turnover for this test includes income from things your Church supplies, such as ticketed events, book and resource sales, hall hire and course fees. It does not include genuine donations, tithes or offerings where the giver receives no material benefit in return. Because so much Church income is gift income, plenty of Churches with healthy bank balances still fall under the threshold.

What happens if you choose to register for GST anyway?

Some Churches register for GST voluntarily even when they are below the threshold. The reason is simple: Churches often pay more GST on their purchases than they collect on their income, which means registration can produce a GST refund. If you register, you generally need to stay registered for at least twelve months, and you take on the obligation to lodge a BAS every cycle. It is a trade-off between administrative effort and cash coming back.

The PAYG test: the trigger a lot of churches forget

Here is where many Churches are caught out. Even if your Church is below the GST threshold and not registered for GST, you may still need to lodge returns if you have PAYG withholding. The moment you pay employees, you must register for PAYG withholding and report to the ATO. For most Churches, that reporting happens through the activity statement system.

Ministers and pastors matter here too. Payments to religious practitioners are subject to special PAYG rules, and a Church that pays a stipend will usually need to be registered for PAYG withholding even if it has no other staff. If your Church pays anyone, this is worth checking carefully.

How often would we lodge, and by when?

If your Church is registered, the ATO sets your reporting cycle when you register. In practice, most Churches report quarterly. Quarterly statements are generally due on the 28th of the month following the quarter, with the December quarter given extra time over the summer period. Monthly lodgers report by the 21st of the following month. Churches that are voluntarily registered and below the threshold may be able to report annually.

Even a quiet quarter needs a lodgement. If you are registered and have nothing to report, you still lodge a nil statement by the due date. Skipping it because there was no activity is one of the easiest ways to attract an avoidable penalty.

A simple way to work out where your Church stands

• Do you supply goods or services (not just receive donations) totalling $150,000 or more a year? If yes, you must register for GST and will lodge a BAS.

• Are you below that but registered voluntarily to claim GST refunds? You will lodge a BAS every cycle, including nil ones.

• Do you pay staff or a minister and withhold tax? You need PAYG withholding registration and will report through the activity statement system.

• None of the above? You most likely have no BAS obligation at all.

Not sure which category your Church falls into? This is exactly the kind of question our team untangles every week. Reach out for a virtual coffee and we will walk through it with you, no jargon required.