An Instalment Activity Statement is a form that businesses use to report to the ATO on PAYG tax withheld, PAYG instalments and Fringe Benefits tax.
A business doesn’t need to be registered for GST to do their IAS but just remember in Xero, that to enable IAS calculations, you’ll need to select with Cash Basis or Accruals Basis for your GST Accounting Method field - i.e. don’t leave it blank and don’t put “None”.
You also need adviser status in Xero to do prepare you IAS in Xero.
Here’s how you can do your Instalment Activity Statement calculations (IAS) in Xero:
- Make sure all your accounts are complete - that means everything that’s supposed to be in Xero is in Xero and your bank reconciliations are done.
- Process all your payroll. Here’s a link on how to process your payroll in Xero. Once that’s done, go to Reports > “Payroll Activity Summary” report. Print that report (tip: you can save it as a pdf on your computer instead if you like) You’ll need it for Point 4 later.
- Go to Adviser > Activity Statement - update the dates for your BAS e.g. if you’re quarterly you’d enter the starting date for the quarter and the end date. Once you’ve updated the date and what type of report - choose “Instalment Activity Statement”, click Update. An example is shown below.
- Fill out the remaining fields needed on the BAS. GST fields are mostly pre-population from the transactions you enter into Xero (that’s why transaction entering should be checked!). There are some that need to be filled and you’ll be able to get the information for this from the report you printed out in Step 2 above.
W1 - Total salary, wages and other payments
W2 - Amount withheld from payments shown at W1
W4 - Amount withheld where no ABN is quoted
W3 - Other amounts withheld (excluding any amount shown in W2 or W4)
7 or 5B - Deferred company/fund instalment or Credit from PAYG income tax instalment variation - this is something the ATO will usually let you know if you need to put a figure in here.
- Now that you’ve put in all the figures, click the green “Publish” button at the bottom.
- Last part - you’ll need to lodge it via the ATO portal.