Standard Business Reporting for Small Business User Experience Testing October 2008 The following scenario was developed to test the high level end-to-end design of Standard Business Reporting. The examples used are indicative of the design at October 2008 and may change. For further information, or to be involved in future user testing please contact SBR@treasury.gov.au.
What is SBR? SBR is a multi-agency program that will reduce the regulatory reporting burden for business by: removing unnecessary & duplicated information from government forms adopting a common reporting language using international standards & best practices utilising business software to automatically pre-fill government forms making financial reports to government a by-product of natural business processes providing an e-interface that enables business to report to government agencies directly from their accounting software, which will provide validation & confirm receipt of reports providing business with a single secure online sign-on to the government agencies involved Let s see how SBR might work for a small business using the example of completing their business activity statement and income tax return.
Business information Business name: Chinese Dome Restaurant Owner/Operators: Mr Chong Age of Operator: 38 Industry: Hospitality Age of Business: 5 years Life cycle stage: Established Office Location: Fremantle, WA Business Structure: Sole Trader Annual turnover: $1.5 million Net assets: $0.5 million Employees: 4 Intermediaries: None Accounting software: MYOB Agencies Reporting: Australian Taxation Office
Personal detail Mr Chong runs and owns a small restaurant called the Chinese Dome Restaurant in Western Australia. He works as the head chef and uses fresh ingredients along with special ingredients imported from China. He has a bookkeeping background and likes managing the business paperwork himself. Since starting the business five years ago, Mr Chong has established the restaurant and does not wish to expand it as he likes to keep things simple. Mrs Chong helps in the restaurant when the grandparents baby-sit their two year-old daughter. Their two teenage children help in the restaurant as cleaners or wait staff on the weekends. Mr Chong employs four other staff members, consisting of extended family and friends, as kitchen hands and wait staff.
Business detail The Chinese Dome restaurant has a reputation for traditional Cantonese food. The turnover of customers each night is very high. It has a good variety of dishes at very reasonable prices. As the chief cook, Mr Chong s expertise is in main dishes, but he also offers traditional Chinese drinks and deserts on the menu. Mr Chong leases the building, and has a cheap yet comfortable fit-out in the restaurant, creating the right atmosphere for his primary market. However, approximately 25 per cent of the revenue made at Chinese Dome is acquired through take-away orders. The business is registered for GST, and lodges BAS statements and income tax returns. Mr Chong does not use a bookkeeper or a tax agent, as he enjoys handling the paperwork himself, and enjoys his breaks away from the kitchen.
Annual reporting obligations 20XX 20XX financial year JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN Activity Statement lodged quarterly to report an estimate and make payment for Chinese Dome s GST and PAYG withholding tax. Pay As You Go instalmentslodged monthly to pay instalments toward liability at the end of the financial year. At every quarter, the PAYG forms are incorporated in their quarterly BAS forms. Income Tax Return lodged at the end of each financial year (due on the 31st of October) to amend any over or under payments derived from payments made at amounts reported on the BAS and PAYG returns. Super Statements lodged quarterly to report super payments to employees PAYG Summaries lodged yearly to the Tax Office and to employees
It is currently October, and based on Mr Chong s annual reporting obligations, his Quarterly Activity Statement is due. Let s see how he completes it using SBRenabled software. Note: Mr Chong has already set himself up with his own credential (used to access SBR) for Chinese Dome Restaurant.
Reconcile Records Business Reporting My Business System It s October and Mr Chong receives his latest bank statement for September. He performs a reconciliation with his records to finish off the quarter. Mr Chong gets a reminder that his BAS obligation is due. He proceeds to complete his BAS using his SBRenabled software package. The software does not change the reconciliation of his records. Today (28 October 2010) Tomorrow In the next week Business Activity Statement Quarter 1 (ATO) Payroll tax annual reconciliation Q4 QBIS (ABS) Quarterly BAS (ATO) In the next 2 weeks Annual payment summary report (ATO) Monthly BAS (ATO) Profit and loss statement (ASIC) Audit report (ASIC) Reminder Good morning Mr Chong, your Quarter 1 Business Activity Statement is due today 29 th Month 20 th Month 22 nd Month 1 st Month 22 nd Month 24 th Month 24 th Month
Pre-fill BAS My Business System Lorum Dolor Ipsum sit Amet consecteteur Reporting Wednesday 22 October 2007 Mr Chong generates his BAS using his SBR-enabled software. For the Tax Office to provide Mr Chong with the Document Identification Number and PAYG Instalment Rate he needs for this quarter s BAS, he needs to prove he is who he says he is. To do this, he clicks on the Pre-fill button, selects his credential in his SBR-enabled software and enters his password. The pre-fill information can then be securely retrieved from the Tax Office and populated into the report. Business Activity Statement (BAS) Quarter 1 Goods and service tax (GST) PAYG Tax Withheld Calculate GST and report quarterly Total sales G1 Does the G1 amount include GST? Export sales G2 Other GST-free sales G3 Capital purchases G10 Non-capital purchases G11 Total salary and wages and other payments W1 Amount withheld from payments shown at w1 W2 Amount withheld where no ABN is quoted W4 Other amounts withheld (excluding any amount shown at W2 or W4)W3 W3 TOTAL AMOUNTS WITHHELD W5 PRE-FILL yes no ABN: Name: PROCEED TO VALIDATE help print connected Please enter your password 1234567891 Mr Chong Password: ********* OK
Complete BAS My Business System Lorum Dolor Ipsum sit Amet consecteteur Reporting Wednesday 22 October 2007 Once generated with the pre-fill information, his SBR-enabled software then automatically populates (auto-fills) most of the other remaining fields. It does this using information Mr Chong has entered into his computer software throughout the reporting period. Business Activity Statement (BAS) Quarter 4 Goods and service tax (GST) Calculate GST and report quarterly Total sales G1 Does the G1 amount include GST? Export sales G2 Other GST-free sales G3 Capital purchases G10 Non-capital purchases G11 yes no help print connected Prior to SBR, Mr Chong had to get involved in messy calculations and printing a number of forms before his BAS could be completed. Now, all Mr Chong does is review the generated activity statement for any anomalies or errors, and completes any other required fields before he proceeds to lodge it. PAYG Tax Withheld Total salary and wages and other payments W1 Amount withheld from payments shown at w1 W2 Amount withheld where no ABN is quoted W4 Other amounts withheld (excluding any amount shown at W2 or W4)W3 W3 TOTAL AMOUNTS WITHHELD W5 PROCEED TO VALIDATE
Software validation Once Mr Chong has completed his BAS, he can use the validate function in is software to check the report prior to lodgement. This is the first in a series of validation checks that will occur. Software validation will do a check for some of the calculations and data formatting. Lorum Dolor Validation x x CANCEL Ipsum sit VALIDATE My Business System Payroll Select reports for validation check. This may take several minutes. Business Activity Statement Quarter 4 20XX Reporting My business software Successfully validated 1 Items CONTINUE Where an error occurs, Mr Chong can correct the error, re-validate that report only, and then move on. This saves Mr Chong time, as well as making his reporting more accurate than it would have been prior to SBR.
Lodge Mr Chong will lodge his BAS directly to the Tax Office. Lorum Dolor Ipsum sit BAS Quarter 1 Lodgement My Business System Payroll Reporting It is not shared with any other agency or permanently stored anywhere while it is being sent from his system, via SBR, to the Tax Office. x Business Activity Statement, Quarter 1 20XX Please enter your password He simply clicks on the lodge button, selects his credential in his software and enters his password. LODGE ABN: 1234567891 Name: Mr Chong Password: ********* OK
Online validation Once Mr Chong has selected to lodge his BAS, a check will be performed to ensure that the correct classification of his information (a compatible version of the SBR Taxonomy), has been used to create the report. Lorum Dolor Ipsum sit Lodgement processing... My Business System Payroll Thank you for your lodgement. Please wait while your transmission is checked. Reporting CANCEL PLEASE WAIT... CONTINUE
Confirmation Mr Chong receives a receipt in real time that confirms delivery of his report to the Tax Office. He saves this in his filing system. My business software Successfully lodged 1 item View lodgement report: SAVE Date: 05/02/XX 16:30pm Receipt number: 174564842312
As it is October, Mr Chong is also required to complete his Income Tax Return. Let s see how he completes it using SBRenabled software.
Obligation due generate report Lorum Dolor Ipsum sit My Business System Amet consecteteur Reporting Wednesday 22 October 2007 Mr Chong is about to lodge his Income Tax Return (ITR). help print connected There is no prefill from the Tax Office for this report. Select report: TFN Declaration Income Tax Return Fringe benefits tax return Super Guarantee GENERATE
Auto-fill form and review content Lorum Dolor Ipsum sit My Business System Amet consecteteur Reporting Wednesday 22 October help print connecte d The generated ITR uses financial information held in Mr Chong s SBRenabled software to automatically fill relevant fields in the report. All he has to do is review the content, check the source of the data, and make any required changes. Company income tax return 20XX-20XX A B C D E F G H 23523 8485 978745 15685 97851 I J K L M N O P 23523 8485 978745 15685 97851 SAVE CONTINUE
Complete schedules SCHEDULES: Company income tax return 20XX-20XX Based on information provided in the ITR, Mr Chong is prompted by his SBR-enabled software about a schedule he is required to complete that is associated with his return. This schedule can be generated and automatically populated using the information he has entered into his system throughout the reporting period. Mr Chong can check the accuracy of his information prior to continuing. Schedules required Your records indicate that you are required to complete the following schedules as part of your 20XX-20XX Company Income Tax Return: Personal services income schedule GENERATE A B C D E F G H 23523 8485 978745 15685 97851 I J K L M N O P 23523 8485 978745 15685 97851 SAVE
Software validation Once Mr Chong has completed the ITR and associated schedules, he can choose to use the validate function in his SBR-enabled software to check the reports prior to lodgement. This will do a check of some of the calculations and data formatting. These validation opportunities ensure his ITR lodgement is quicker and more accurate than what it would have been prior to SBR. Lorum Dolor Validation CANCEL Ipsum sit My Business System VALIDATE Payroll Select reports for validation check. This may take several minutes. 1. Income Tax Return 2008-2009 1b. Personal Services Income Schedule Reporting My business software Successfully validated 2 item
Lodge Once Mr Chong has completed all the requirements for the ITR, he will lodge the report and associated schedules. My Business System Lorum Dolor Ipsum sit Payroll Income Tax Return 20XX-20XX Lodgement 1. Income Tax Return 20XX-20XX Reporting He simply clicks on the lodge button, selects his credential in his software and enters his password. 1b. Personal Services Income Schedule LODGE Please enter your password ABN: Name: 1234567891 Mr Chong Password: ********* OK
Online validation My Business System Lorum Dolor Ipsum sit Payroll Lodgement processing... Reporting A check will ensure Mr Chong s lodgement is using the current SBR Taxonomy. Even if he is not using the latest version, the report may still be accepted, but he will be notified a newer version is available. Thank you for your lodgement. Please wait while your transmission is checked. CANCEL PLEASE WAIT... CONTINUE My business software! Lodgement Accepted Updated SBR Taxonomy is available The version of the taxonomy used for this lodgement is not the latest. The latest version may Okay
Confirmation After lodging the ITR and associated schedules, Mr Chong receives a receipt in real time that confirms delivery of his report to the Tax Office. He can then save this into his filing system. My business software Successfully lodged 2 items View lodgement report: Date: Receipt number: 05/02/12 16:30pm 174564842312 SAVE