Understanding BAS Returns
Business Activity Statements (BAS) are mandatory reports that Australian businesses use to report and pay their GST, PAYG withholding, and other tax obligations to the ATO. This comprehensive guide explains everything you need to know about lodging BAS returns, calculating GST, meeting deadlines, and avoiding penalties.
📘 What is a BAS?
A BAS (Business Activity Statement) is a form Australian businesses use to report and pay their tax obligations, including GST collected from sales, GST credits from purchases, PAYG withholding (if you have employees), and PAYG installments (income tax).
Who Needs to Lodge BAS Returns?
- All GST-registered businesses (mandatory once registered)
- Businesses with employees (for PAYG withholding)
- Businesses making PAYG installment payments
- Some non-profit organizations
Frequency: Most small businesses lodge quarterly (4 times per year). Larger businesses (turnover >$20 million) must lodge monthly.
BAS Reporting Periods and Deadlines
| Period | Quarter | Due Date (Self-Lodgment) | Due Date (via Tax Agent) |
|---|---|---|---|
| July - September | Q1 | 28 October | 25 November |
| October - December | Q2 | 28 February | 25 March |
| January - March | Q3 | 28 April | 25 May |
| April - June | Q4 | 28 July | 25 August |
💡 Pro Tip: Use a Tax Agent
Using a registered tax agent gives you an automatic extension of 2-4 weeks on lodgment deadlines, reducing stress and providing professional oversight.
Key BAS Labels Explained
BAS forms use specific "labels" (codes) for different types of information. Here are the most important ones for GST:
| Label | Description | Example |
|---|---|---|
| G1 | Total sales (including GST) | $110,000 |
| G2 | Export sales (GST-free) | $5,000 |
| G3 | Other GST-free sales | $2,000 |
| G10 | Capital purchases (assets over $1,000) | $11,000 |
| G11 | Non-capital purchases (regular expenses) | $33,000 |
| 1A | GST on sales (output tax) | $10,000 |
| 1B | GST on purchases (input tax credits) | $4,000 |
| 7 | Net GST payable/refundable (1A minus 1B) | $6,000 (you pay ATO) |
Step-by-Step: Completing Your BAS
Step 1: Gather Your Records
You'll need:
- All sales invoices for the quarter
- All purchase invoices/receipts (with valid tax invoices)
- Bank statements
- Accounting software reports (if using Xero, MYOB, QuickBooks)
- Export documentation (if applicable)
Step 2: Calculate Total Sales (Label G1)
Cash Accounting: Add up all payments received in the quarter (including GST)
Accrual Accounting: Add up all invoices issued in the quarter (including GST)
Example:
Total sales invoiced: $110,000 (GST-inclusive)
Enter in G1: $110,000
Step 3: Calculate GST on Sales (Label 1A)
Formula: Total Sales (G1) ÷ 11 = GST Collected
Example:
$110,000 ÷ 11 = $10,000
Enter in 1A: $10,000
Step 4: Calculate Total Purchases (Labels G10 + G11)
G10 (Capital Purchases): Equipment, vehicles, assets over $1,000
G11 (Non-Capital): Regular expenses (supplies, rent, utilities)
Example:
Capital: $11,000 (bought computer equipment)
Non-capital: $33,000 (regular expenses)
Total purchases: $44,000
Step 5: Calculate GST on Purchases (Label 1B)
Formula: Total Purchases ÷ 11 = GST Claimable
Example:
($11,000 + $33,000) ÷ 11 = $4,000
Enter in 1B: $4,000
Step 6: Calculate Net GST (Label 7)
Formula: 1A (GST on sales) - 1B (GST on purchases) = Net GST
Positive number: You owe ATO this amount
Negative number: ATO owes you a refund
Example:
$10,000 (1A) - $4,000 (1B) = $6,000
You pay ATO: $6,000
Complete BAS Example (Quarterly Return)
Sample BAS: Small Consulting Business (Q1 2026)
Sales Activity:
- Consulting invoices: $88,000 (inc. GST)
- Training services: $22,000 (inc. GST)
- Total Sales (G1): $110,000
Purchase Activity:
- New laptop: $3,300 (capital, G10)
- Software subscriptions: $2,200 (non-capital, G11)
- Office supplies: $1,100 (non-capital, G11)
- Advertising: $5,500 (non-capital, G11)
- Total Capital (G10): $3,300
- Total Non-Capital (G11): $8,800
GST Calculation:
- GST on sales (1A): $110,000 ÷ 11 = $10,000
- GST on purchases (1B): ($3,300 + $8,800) ÷ 11 = $1,100
- Net GST payable (Label 7): $10,000 - $1,100 = $8,900
Result: Pay $8,900 to ATO by October 28 (or November 25 via agent)
How to Lodge Your BAS
Option 1: Online via Business Portal (Recommended)
- Log in to ATO Business Portal
- Select "Lodge" → "Activity statement"
- Choose the relevant quarter
- Enter figures in each label (G1, 1A, 1B, etc.)
- Review and submit
- Make payment (if GST payable)
Option 2: Via Accounting Software
- Xero: Reports → Activity Statement → File with ATO
- MYOB: Reports → Activity Statement → Lodge
- QuickBooks: Taxes → Prepare BAS → Submit
Software auto-calculates labels from your transactions—verify before submitting.
Option 3: Through a Tax Agent
- Send records to your accountant/bookkeeper
- They complete and lodge on your behalf
- Extended deadline (extra 2-4 weeks)
- Cost: $100-300 per quarter
Payment Methods
- BPAY: Use biller code and reference number from BAS
- Direct debit: Set up automatic payments
- Credit/debit card: Via Business Portal (fee applies)
- Bank transfer: Use ATO bank details and PRN
⚠️ Payment Due Same Day as Lodgment
GST payment must be made by the same date as lodgment deadline. If you lodge on October 28, payment must also be received by October 28. Late payment incurs interest charges.
Common BAS Mistakes
❌ Errors to Avoid:
- Using wrong accounting method: Cash vs accrual—be consistent
- Including non-GST items: Don't include wages, residential rent in G1
- Forgetting to separate capital purchases: Assets >$1,000 go in G10, not G11
- Claiming without tax invoices: Need valid invoices for all 1B claims
- Incorrect calculations: Use ÷11, not ×0.10
- Missing deadlines: $313 penalty per late return
What If You Get a GST Refund?
If your input tax credits (1B) exceed GST collected (1A), you'll receive a refund from the ATO.
Example:
- 1A (GST on sales): $5,000
- 1B (GST on purchases): $8,000
- Refund: $3,000
Refund timeline: Usually processed within 14 days of lodging BAS. Paid into your nominated bank account.
Setting Up a Payment Plan
If you can't pay on time:
- Lodge on time: Don't delay lodgment—penalties are higher for non-lodgment
- Contact ATO immediately: Call 13 28 66
- Arrange payment plan: ATO offers installment arrangements
- Interest applies: General interest charge on unpaid amount
Amending a BAS
Made an error? You can amend a BAS:
- Small errors (<$1,000): Correct in your next BAS
- Large errors (≥$1,000): Must lodge a revision
- How to revise: Business Portal → Amend → Select quarter → Enter corrections
BAS Checklist
Before Lodging:
- ☐ All sales invoices accounted for
- ☐ All purchase receipts collected (valid tax invoices)
- ☐ Bank reconciliation completed
- ☐ Correct accounting method used (cash or accrual)
- ☐ Capital vs non-capital purchases separated
- ☐ Calculations verified (use software or calculator)
- ☐ Exports properly categorized (G2)
After Lodging:
- ☐ Payment made by deadline
- ☐ Confirmation received from ATO
- ☐ Records filed (keep 5 years)
- ☐ Calendar reminder set for next quarter