How BAS Works: What Goes On It and How to Lodge

What is a BAS?

A business activity statement (BAS) is the form a business uses to report and pay goods and services tax (GST), pay as you go (PAYG) withholding, PAYG instalments and some other taxes to the Australian Taxation Office (ATO). According to the ATO, a business registered for GST needs to lodge one.

Not every business has to register for GST. The ATO says registration is required when GST turnover reaches $75,000, or $150,000 for a non-profit organisation. It is also required for taxi, limousine and ride-sourcing travel at any turnover, and to claim fuel tax credits. Outside those cases registering is optional, and a business that opts in generally stays registered for at least 12 months.

GST turnover is total business income, not profit, minus items such as the GST in sales. The threshold test looks two ways: the current month plus the previous 11, and the current month plus the next 11. Once registration is required, the business has 21 days to register.

Even with nothing to report for a period, a registered business still lodges a nil BAS by the due date.

What goes on a BAS: three GST labels by default for small businesses

Small businesses generally report three GST labels. According to the ATO, Simpler BAS is the default reporting method for small businesses with a GST turnover under $10 million, and it asks only for G1 (total sales), 1A (GST on sales) and 1B (GST on purchases), with no GST calculation worksheet and no total purchases figure. A business at $10 million or more uses full reporting, which adds G2 (export sales), G3 (other GST-free sales), G10 (capital purchases) and G11 (non-capital purchases).

The ATO personalises each BAS to the business, so report on the form you receive. Other label sets exist for items such as fuel tax credits at 7C and 7D. The table starts with those three GST labels, then covers the PAYG withholding and instalment labels.

PAYG withholding and PAYG instalments are different things. Withholding is tax taken from payments to others, such as employees. Instalments are prepayments of tax on your own business and investment income, and the ATO credits them against your income tax when you lodge your tax return. The guide on how sole traders pay tax covers instalments from that angle.

A worked quarter, from the books to the labels

This example is invented for illustration. It is not a client, and the business and its figures, including the instalment rate, are made up. The business is registered for GST and reports quarterly on Simpler BAS. It uses the cash basis and the accounts method, reports G1 including GST, employs staff and pays instalments using a 4% rate. The period is January to March.

Sales received in the quarter

G1 is wider than trade income. The ATO lists business asset sales and interest from bank accounts among the amounts to report at G1. The GST in a GST-inclusive price is the price divided by 11, so the ute carries $1,000. GST-free and input-taxed sales carry no GST, so the exports and the interest show $0 at 1A.

Purchases paid in the quarter

Payroll and instalments

Gross wages were $30,000 with $4,500 withheld, so W1 is $30,000, W2 and W5 are $4,500, and label 4 is $4,500.

T1 is the GST-exclusive income from the sales table: $79,100 less $7,000 of GST, less the ute at $10,000 excluding GST, which gives $62,100. The example leaves the ute out of T1 to keep the figures simple. Whether an asset sale counts as instalment income is a question for a registered tax agent. T1 x T2 is $62,100 x 4%, so 5A is $2,484.

What the BAS adds up to

Cash or accrual: the method decides which BAS, not whether to report

The GST accounting method decides which BAS a sale or purchase lands on. According to the ATO, on a cash basis GST goes on the BAS for the period in which payment is received or made. On a non-cash (accruals) basis, a sale goes on the BAS for the period in which the tax invoice is issued or any payment is received, whichever happens first. A purchase is claimed in the first period in which the invoice is issued or any payment is made, as long as any required tax invoice is held.

Take the invented worked quarter above, with its cash-basis figures of G1 $79,100, 1A $7,000 and 1B $2,400, then add two unpaid items at 31 March, both GST-inclusive and taxable: a $3,300 customer invoice issued, and a $5,500 fully business supplier tax invoice received.

On the cash basis, both unpaid items wait for the BAS covering the period when the money moves. If only part is paid, only the GST in that part counts.

Neither method suits everyone. The ATO says cash better aligns money flowing through a business with its BAS liabilities, while non-cash is better suited to businesses that are not paid immediately and can be more complicated. A business with aggregated turnover under $10 million, or one using cash accounting for income tax, can use either, and most larger businesses must use non-cash. Which method fits a particular business depends on its circumstances, so a registered tax or BAS agent is the right person to ask.

What can you claim on your BAS? GST credits, not the expense itself

A BAS claims the GST inside a purchase price, not the cost of the purchase. According to the ATO, a GST credit is available when you are registered for GST, the purchase is solely or partly for your business, it does not relate to input-taxed sales, the price included GST and you paid or must pay for it.

Paperwork matters. Purchases over $82.50 including GST need a tax invoice, and a supplier has 28 days to provide one after a request. For $82.50 or less, a tax invoice, cash register docket, receipt or invoice will do.

No credit is available for private expenses, or for purchases with no GST in the price, such as bank account-keeping fees, stamp duty and GST-free items like basic foods. A purchase used partly privately earns a credit only for the business part. Wages, super, loan repayments, fines and donations are not reported on the BAS for GST at all.

A missed credit can go in a later BAS, within a limit. The ATO says the 4-year credit time limit ends 4 years after the lodgment due date of the BAS for the period in which the credit could first have been claimed.

Do you get money back? Sometimes. If GST credits are greater than the GST you are liable to pay, the ATO says you are entitled to a refund. After processing a BAS, either the business owes the ATO or the ATO owes the business. The ATO cannot process a refund until all outstanding BAS are lodged, and a refund can be delayed or offset against a tax debt.

Checks that catch errors before you lodge

These checks combine ATO instructions with arithmetic that follows from the labels, shown on the worked quarter. They are a general process, not a sign-off on any particular BAS.

1. Reconcile to the bank. The ATO's tip is to reconcile sales with bank statements. Do it before pulling any figure.
2. Test G1 for completeness. Look for asset sales, trade-ins, bank interest and GST-free sales, which all belong at G1.
3. Divide back to 1A. With G1 reported including GST, take G1 less GST-free and input-taxed sales, then divide by 11. In the example, $79,100 less $2,100 is $77,000, and $77,000 divided by 11 is $7,000, which matches 1A. Adjustments will move this figure, so explain any gap rather than force it. A gap can point to a coding error. The ATO's examples of mistakes include treating a GST-free sale as taxable, and the reverse.
4. Check each invoice at 1B. Count each invoice once, hold a tax invoice where one is required and claim only the business portion. On mixed bills such as insurance, claim the GST shown on the invoice, not one eleventh of the total.
5. Look for credits that should not exist. Scan GST coding on bank account-keeping fees, stamp duty, wages, super and private spending. None should produce a credit.
6. Add up the withholding. W5 must equal W2 + W4 + W3, must leave out W1 and must match label 4. Compare W2 with the payroll report for the same period.
7. Test T1 against G1. T1 excludes GST, so a T1 equal to a GST-inclusive G1 is a warning sign. In the example, the $17,000 gap between G1 and T1 is the $7,000 of GST plus the $10,000 ute.
8. Check the form rules. The ATO asks for whole dollars rounded down, no negative figures or symbols, and the box under G1 marked to show whether amounts include GST. Enter 0 at G1, 1A or 1B when there is nothing to report there, and leave other labels that do not apply blank, unless the ATO instructs otherwise, rather than writing N/A or nil.
9. Keep the working. The ATO asks for a copy of the BAS and the records used to prepare it to be kept for five years after they are prepared, obtained or the transactions completed, or the period of review, whichever is later.

Found a mistake after lodging? Many GST errors go in the next BAS

Many GST mistakes can be corrected in the next BAS, according to the ATO. Otherwise the fix is a revision of the original BAS, and conditions apply depending on whether the error is a credit or a debit.

The ATO separates two things. A mistake is an amount that was wrong at the time of lodgment, such as a clerical error, double-counted purchases or a wrongly classified sale. An adjustment is an amount that was right at lodgment but changed later, such as a price change or goods returned and the sale cancelled. An adjustment generally goes on the BAS for the current period.

Which route applies to a given error depends on the facts, so a registered tax or BAS agent can confirm the right one.

When a BAS is due

The due date appears on each BAS, and how often a business lodges depends on GST turnover. According to the ATO, a business with GST turnover of $20 million or more lodges monthly, as does any business the ATO has directed to do so. A business under $20 million lodges quarterly unless directed otherwise, and can choose monthly. A business voluntarily registered with GST turnover under $75,000, or under $150,000 for a not-for-profit, can elect to report annually.

The table does not cover the annual GST return, and different due dates may apply to one lodged through a registered tax or BAS agent, so confirm that date with the ATO or the agent. A date on a weekend or public holiday moves to the next working day. The ATO says online lodgers may be eligible for an extra 2 weeks on a quarterly BAS, and agents may get extra time, but no later date applies to the October to December quarter because its due date already includes a one-month extension. The ATO advises lodging and paying in full and on time to avoid penalties and interest, and contacting it as soon as possible if that cannot happen. The guide to ATO payment plans covers what happens when a bill cannot be paid.

How to lodge, and who can do it for you

The ATO offers three ways to lodge: online, through a registered agent, or by mail. Most businesses that lodge their own BAS do it online, and a business with GST turnover of $20 million or more must.

1. Find the BAS. Online, it is on the Lodgments tab under Not lodged, and the ATO says most taxpayers get an email 21 days before the due date. On paper, the ATO sends the form, and a sample BAS cannot be used to lodge.
2. Prepare it. Complete the labels from reconciled books. Online lodgment can be through Online services for individuals and sole traders, Online services for business, or software enabled for Standard Business Reporting (SBR).
3. Review it. Online lodgment lets you check that the amount calculated equals what you expect to pay or receive.
4. Lodge and pay. Do both by the due date.

A registered tax or BAS agent can lodge, vary and pay on your behalf. According to the Tax Practitioners Board (TPB), there are significant civil penalties for anyone providing BAS services for a fee or reward while unregistered, and the TPB public register shows whether an agent is currently registered. The guide on bookkeepers, BAS agents and accountants sets out who can do what.

This guide is general information, not advice about your affairs. Lomandra Accounting is registered with the Tax Practitioners Board, and its services include BAS lodgements and GST reviews, with BAS prepared from reconciled figures and GST coding checked. It works online by phone, video and email. See also the pages for a business accountant on the Sunshine Coast and in Coolum Beach, or contact Lomandra Accounting.