What is a BAS (Business Activity Statement)?
A Business Activity Statement (BAS) is an Australian Tax Office (ATO) form that businesses use to report and pay several tax obligations including GST, PAYG withholding, PAYG instalments, and other taxes. If you're registered for GST or have employees, you're required to lodge a BAS regularly—typically quarterly, monthly, or annually depending on your business turnover.
This comprehensive guide walks you through everything you need to know: from understanding each BAS label (G1, 1A, 1B, etc.) to completing a full worked example, choosing accounting methods, meeting 2025 due dates, and avoiding costly penalties.
Quick BAS Facts 2025
- Who must lodge: GST-registered businesses, employers with PAYG withholding
- Frequency: Quarterly (most common), Monthly (turnover > $20M), or Annual (< $75k turnover)
- Next quarterly due date: 28 February 2025 (Oct-Dec 2024 quarter)
- Late lodgment penalty: 1 penalty unit per 28 days (up to 5 units max) = $313-1,565
- Method: Online via ATO Business Portal, accounting software (Xero/MYOB), or tax agent
BAS vs IAS vs GST Return: Key Differences
| Form | What It's For | Who Lodges | Frequency |
|---|---|---|---|
| BAS | GST + PAYG withholding + PAYG instalments + other taxes | GST-registered businesses, employers | Quarterly, Monthly, or Annual |
| IAS | PAYG instalments ONLY (no GST) | Individuals, businesses NOT registered for GST | Quarterly |
| GST Return | GST ONLY (simpler than BAS) | Rare - replaced by BAS for most businesses | Varies |
Key Point: If you're GST-registered, you'll lodge a BAS (not a separate GST return). The BAS includes GST reporting plus other taxes in a single form.
Who Must Lodge a BAS?
Mandatory BAS Lodgment
You must lodge a BAS if:
- GST-registered: Annual turnover ≥ $75,000 (or $150,000 for non-profit organizations)
- Employer: You withhold tax from employee wages (PAYG withholding)
- PAYG instalments: You pay income tax instalments throughout the year
- Other taxes: Wine equalisation tax (WET), luxury car tax (LCT), fuel tax credits
Voluntary BAS Lodgment
You can choose to register for GST (and thus lodge BAS) if:
- Turnover < $75,000 but you want to claim GST credits on business expenses
- You're starting a business and expect to exceed $75,000 within 12 months
Understanding BAS Labels: Complete Guide
The BAS form uses alphanumeric labels (G1, 1A, 1B, 7, W1, W2, etc.) to organize different tax obligations. Here's a detailed breakdown of the most common labels:
GST Section Labels
What it is: All your business sales for the period, excluding GST.
Formula: Total Sales ÷ 1.1 (for GST-inclusive sales)
Includes:
- Product sales (GST-exclusive amount)
- Service fees (GST-exclusive amount)
- GST-free sales (exports, basic food if applicable)
Example: If you invoiced $110,000 (incl. GST), then G1 = $110,000 ÷ 1.1 = $100,000
What it is: Total GST you collected from customers (output tax).
Formula: G1 ÷ 11
Why divide by 11? Because GST is 1/11th of the GST-exclusive price (10% = 1/11)
Example: If G1 = $100,000, then 1A = $100,000 ÷ 11 = $9,090.91
What it is: Total GST you paid on business purchases (input tax credits).
How to calculate: Add up GST from all valid tax invoices received.
Claimable purchases:
- Stock/inventory purchased for resale
- Equipment, tools, machinery (business use)
- Rent (commercial property only - residential rent is input-taxed)
- Utilities (electricity, gas, internet - business portion)
- Professional services (accountant, lawyer fees)
- Marketing and advertising
NOT claimable:
- Residential rent (input-taxed)
- Bank fees (financial services are input-taxed)
- Purchases without a valid tax invoice (for amounts > $82.50)
- Personal expenses
Example: You received tax invoices totaling $22,000 (incl. $2,000 GST). Label 1B = $2,000
What it is: Net GST you owe to ATO (or refund you'll receive).
Formula: Label 1A - Label 1B
Interpretation:
- Positive number: You owe this amount to the ATO
- Negative number: The ATO owes you a refund
Example:
Label 1A (GST on sales): $9,090.91 Label 1B (GST on purchases): $2,000.00 Label 7: $9,090.91 - $2,000 = $7,090.91 (amount you owe ATO)
Label W1 - Total salary, wages and other payments
Total gross wages paid to employees (before tax withheld).
Label W2 - Amounts withheld from payments shown at W1
Total tax withheld from employee wages (PAYG withholding).
Example:
W1: $50,000 (total gross wages for quarter) W2: $8,500 (total tax withheld from employees)
Note: If you don't have employees, leave W1 and W2 blank.
Complete BAS Worked Example
Scenario: Small Consulting Business (Quarterly BAS)
Business: Smith Consulting Pty Ltd
Period: 1 October 2024 - 31 December 2024 (Q2 2024-25)
Due Date: 28 February 2025
Accounting Method: Cash basis (records sales when paid, expenses when paid)
Step 1: Gather Your Records
Sales Invoices Issued (and Paid by Customers):
- Client A consulting project: $11,000 (incl. GST)
- Client B retainer (3 months): $16,500 (incl. GST)
- Client C workshop: $5,500 (incl. GST)
- Client D strategy session: $2,200 (incl. GST)
Total Invoiced & Received: $35,200 (incl. GST)
Purchase Invoices Received (and Paid):
| Expense | Total (incl. GST) | GST Amount |
|---|---|---|
| Office rent (commercial) | $6,600 | $600 |
| Laptop (business use) | $2,200 | $200 |
| Software subscriptions (Adobe, Microsoft) | $550 | $50 |
| Electricity | $330 | $30 |
| Internet & phone | $220 | $20 |
| Accountant fees | $1,100 | $100 |
| Total | $11,000 | $1,000 |
Step 2: Calculate BAS Labels
Label G1 - Total Sales (GST-Exclusive)
Total sales: $35,200 (incl. GST)
GST-exclusive: $35,200 ÷ 1.1 = $32,000
G1 = $32,000
Label 1A - GST on Sales
Formula: G1 ÷ 11
$32,000 ÷ 11 = $2,909.09
1A = $2,909.09
Label 1B - GST on Purchases
Sum of GST from all tax invoices received (from table above)
1B = $1,000
Label 7 - Net GST Payable
Formula: 1A - 1B
$2,909.09 - $1,000 = $1,909.09
Label 7 = $1,909.09
Result: Smith Consulting owes the ATO $1,909.09, due by 28 February 2025.
Step 3: Lodge via ATO Business Portal
- Log in to ATO Business Portal (myGovID + RAM)
- Select "Lodgments" → "Activity Statements"
- Click on the current BAS period (Oct-Dec 2024)
- Enter calculated amounts:
- G1: $32,000
- 1A: $2,909.09
- 1B: $1,000.00
- 7: $1,909.09 (auto-calculated)
- Review and submit
- Pay $1,909.09 by 28 February 2025 (BPAY, EFT, or payment plan)
Try Our Interactive BAS Calculator
Use our free BAS calculator below to quickly calculate your BAS labels. Just enter your total sales (including GST) and the total GST from your purchases, and we'll instantly calculate G1, 1A, 1B, and Label 7 for you.
Interactive BAS Calculator
Calculate your quarterly BAS labels instantly. Enter your sales and purchases GST to see Label 7 (net GST payable/refundable).
Cash vs Accrual Accounting for BAS
The ATO allows two accounting methods for BAS lodgment: cash basis and accrual basis. Your choice affects when you report sales and claim GST credits.
| Aspect | Cash Basis | Accrual Basis |
|---|---|---|
| When GST on sales is reported | When you receive payment from customer | When you issue invoice (even if not paid yet) |
| When GST credits are claimed | When you pay the supplier | When you receive invoice (even if not paid yet) |
| Eligibility | Turnover < $10 million (or < $20M if approved by ATO) | Any business (mandatory if turnover ≥ $10M) |
| Cash Flow Impact | Better: You only pay GST when you've been paid | Worse: Must pay GST even if customer hasn't paid you yet |
| Complexity | Simpler - matches your bank transactions | More complex - requires tracking invoices separately |
| Best For | Small businesses, slow-paying clients, service providers | Large businesses, fast payment cycles, inventory-heavy businesses |
Example: Impact of Accounting Method
Scenario: You invoice $11,000 (incl. $1,000 GST) on 30 December 2024, but customer doesn't pay until 15 January 2025. CASH BASIS (Oct-Dec 2024 BAS): - Sales (G1): $0 (not paid yet) - GST on sales (1A): $0 (not paid yet) - Report in NEXT quarter (Jan-Mar 2025) when paid ACCRUAL BASIS (Oct-Dec 2024 BAS): - Sales (G1): $10,000 (invoice issued in Dec) - GST on sales (1A): $1,000 (invoice issued in Dec) - Must pay ATO $1,000 by Feb 28, even though customer hasn't paid you yet! CASH FLOW ADVANTAGE: Cash basis defers GST payment until you're actually paid.
Switching Between Methods
You can switch from cash to accrual (or vice versa) by notifying the ATO. However:
- Restriction: Can only switch once every 12 months
- Transition adjustments: May be required to avoid double-counting or omissions
- Recommendation: Consult an accountant before switching
Industry-Specific BAS Examples
Every industry has unique GST considerations. Below are five detailed worked examples across different sectors to help you understand how BAS applies to your specific business type.
Example 1: Retail Store (Clothing Boutique)
🛍️ Boutique Fashion Store - Quarterly BAS
Business: Trendy Threads Pty Ltd (Retail clothing store)
Period: Jul-Sep 2024 (Q1 2024-25)
Accounting Method: Cash basis
Sales (Cash received in quarter):
- Clothing sales (walk-in customers): $88,000 (incl. GST)
- Online sales (Shopify): $33,000 (incl. GST)
- Gift vouchers sold: $5,500 (incl. GST)
- Total Sales: $126,500 (incl. GST)
Purchases (Invoices paid in quarter):
| Expense | Total (incl. GST) | GST Claimable |
|---|---|---|
| Stock purchases (wholesale clothing) | $44,000 | $4,000 |
| Shop rent (commercial) | $8,800 | $800 |
| Shopify subscription | $110 | $10 |
| POS system (Square) | $165 | $15 |
| Marketing (Facebook ads) | $1,100 | $100 |
| Electricity | $440 | $40 |
| Total Purchases | $54,615 | $4,965 |
BAS Calculation:
Retail-Specific Notes:
- Gift vouchers: GST reported when sold (not when redeemed)
- Stock purchases: Major GST credits available on wholesale inventory
- High volume, low margins: GST credits essential for cash flow
Example 2: Construction/Tradie (Electrician)
⚡ Sparky Electrical Services - Quarterly BAS
Business: John Smith Trading as "Sparky Electrical"
Period: Oct-Dec 2024 (Q2 2024-25)
Accounting Method: Cash basis
Sales (Progress payments received):
- Residential rewiring job (50% deposit): $16,500 (incl. GST)
- Commercial fit-out (final payment): $38,500 (incl. GST)
- Small jobs (<$1,000 each): $27,500 (incl. GST)
- Total Sales: $82,500 (incl. GST)
Purchases (Materials & expenses paid):
| Expense | Total (incl. GST) | GST Claimable |
|---|---|---|
| Electrical supplies (cables, switches, lights) | $19,800 | $1,800 |
| Subcontractor (apprentice electrician - ABN holder) | $11,000 | $1,000 |
| Work van lease payment | $2,200 | $200 |
| Fuel (business use) | $880 | $80 |
| Tools (new drill set) | $1,320 | $120 |
| Insurance (public liability) | $1,650 | $150 |
| Total Purchases | $36,850 | $3,350 |
BAS Calculation:
Construction-Specific Notes:
- Subcontractor ABN verification: Always verify subcontractor has ABN (avoid withholding tax)
- Progress payments: Report GST when payment received (not when invoice issued on cash basis)
- Materials markup: If you supply materials, charge GST on full amount (labor + materials)
- Margin scheme: Property developers can use margin scheme to reduce GST on land sales
Example 3: Hospitality (Cafe)
☕ Daily Grind Cafe - Quarterly BAS
Business: Daily Grind Cafe Pty Ltd
Period: Jan-Mar 2025 (Q3 2024-25)
Accounting Method: Cash basis
Sales (Daily takings):
- Food & beverage sales (POS total): $165,000 (incl. GST)
- Catering events: $16,500 (incl. GST)
- Uber Eats/Menulog (net after commission): $9,900 (incl. GST)
- Total Sales: $191,400 (incl. GST)
Purchases (Supplier invoices paid):
| Expense | Total (incl. GST) | GST Claimable |
|---|---|---|
| Food & beverage stock (wholesalers) | $55,000 | $5,000 |
| Coffee beans & milk | $16,500 | $1,500 |
| Cafe rent (commercial) | $13,200 | $1,200 |
| Uber Eats/Menulog commission fees (35%) | $5,775 | $525 |
| POS system & payment processing | $1,650 | $150 |
| Gas & electricity | $2,640 | $240 |
| Cleaning & supplies | $1,100 | $100 |
| Total Purchases | $95,865 | $8,715 |
BAS Calculation:
Hospitality-Specific Notes:
- All food/beverage taxable: In Australia, all prepared food attracts 10% GST (unlike basic groceries)
- Delivery platform fees: Uber Eats/Menulog fees include GST - claim as input tax credit
- Tips/gratuities: If passed directly to staff with no markup, no GST applies
- Staff meals: Not sales - don't charge GST on staff meals (but can't claim input credits)
- High volume, daily reconciliation: Use POS system to track GST automatically
Example 4: E-commerce (Online Store)
🛒 EcoGoods Online - Quarterly BAS
Business: EcoGoods Pty Ltd (Sustainable products marketplace)
Period: Apr-Jun 2025 (Q4 2024-25)
Accounting Method: Cash basis
Sales (Payment gateway deposits):
- Australian customer sales (Shopify): $198,000 (incl. GST)
- Wholesale B2B sales (registered businesses): $44,000 (incl. GST)
- Export sales (shipped overseas): $15,000 (GST-free - zero-rated)
- Total Taxable Sales: $242,000 (incl. GST)
- Export Sales (GST-free): $15,000
Purchases (Supplier payments):
| Expense | Total (incl. GST) | GST Claimable |
|---|---|---|
| Stock purchases (Australian suppliers) | $88,000 | $8,000 |
| Shopify subscription + apps | $990 | $90 |
| Australia Post shipping costs | $16,500 | $1,500 |
| Payment gateway fees (Stripe 1.75%) | $4,620 | $420 |
| Google Ads & Facebook marketing | $8,800 | $800 |
| Warehouse rent | $6,600 | $600 |
| Photography & content creation | $2,200 | $200 |
| Total Purchases | $127,710 | $11,610 |
BAS Calculation:
Label G2: $15,000 (export sales - GST-free)
E-commerce-Specific Notes:
- Export sales: GST-free (zero-rated) if shipped overseas with proof of export
- International sales to consumers: GST-free for goods shipped abroad
- Platform fees: Shopify, Stripe, PayPal fees include GST - claim as credits
- Dropshipping: If Australian supplier dropships, GST applies to retail price (not wholesale)
- Digital products: GST applies to all Australian customers for digital downloads/SaaS
- Marketplace sales: Amazon/eBay - report actual payment received (net of fees)
Example 5: Professional Services (Accounting Firm)
💼 Wilson & Partners Accountants - Quarterly BAS
Business: Wilson & Partners Pty Ltd (Chartered Accountants)
Period: Jul-Sep 2025 (Q1 2025-26)
Accounting Method: Accrual basis (turnover > $10M requires accrual)
Sales (Invoices ISSUED in quarter - accrual):
- Tax return preparation (300 clients × $550 avg): $165,000 (incl. GST)
- BAS preparation services: $55,000 (incl. GST)
- Business advisory & consulting: $82,500 (incl. GST)
- SMSF audits: $27,500 (incl. GST)
- Total Invoiced: $330,000 (incl. GST)
Purchases (Invoices RECEIVED in quarter - accrual):
| Expense | Total (incl. GST) | GST Claimable |
|---|---|---|
| Office rent (CBD commercial) | $33,000 | $3,000 |
| Software (Xero, MYOB, tax software) | $8,800 | $800 |
| Professional indemnity insurance | $11,000 | $1,000 |
| Marketing & advertising | $5,500 | $500 |
| Professional development & CPD | $3,300 | $300 |
| Office supplies & printing | $2,200 | $200 |
| CPA/CA membership fees | $1,650 | $150 |
| Total Purchases | $65,450 | $5,950 |
BAS Calculation:
Professional Services-Specific Notes:
- Accrual method: Report GST when invoice ISSUED, not when paid (required for turnover >$10M)
- Advance payments/retainers: Report GST when received, even if services not yet delivered
- GST-free services: Most accounting/tax services are taxable, but some financial supplies may be GST-free/input-taxed
- Home office expenses: Can claim GST portion on home office costs (proportional business use)
- Low input tax credits: Service businesses have lower GST credits (no stock/inventory)
💡 Key Takeaways Across Industries
- Cash vs Accrual: Most small businesses use cash (simpler), large businesses (>$10M) must use accrual
- High input credits: Retail, construction, hospitality claim significant GST on stock/materials
- Low input credits: Professional services, e-commerce have lower expenses (higher net GST payable)
- Export sales: GST-free if shipped overseas with proof - boosts cash flow
- Platform fees: Uber Eats, Shopify, Stripe, PayPal fees include GST - always claim
- Industry-specific rules: Hospitality (all food taxable), Construction (margin scheme), Services (input-taxed supplies)
BAS Due Dates 2025
Quarterly Lodgment (Most Common)
Who: Most small-medium businesses with GST turnover < $20 million
| Quarter | Period | Due Date (Self-Lodgers) | Extended Due Date (Tax Agent) |
|---|---|---|---|
| Q1 2024-25 | July - September 2024 | 28 October 2024 | 25 November 2024 |
| Q2 2024-25 | October - December 2024 | 28 February 2025 | 25 March 2025 |
| Q3 2024-25 | January - March 2025 | 28 April 2025 | 26 May 2025 |
| Q4 2024-25 | April - June 2025 | 28 July 2025 | 25 August 2025 |
Monthly Lodgment
Who: Businesses with GST turnover > $20 million, or voluntary monthly lodgers
Due Date: 21st of the month following the reporting month
- January 2025 BAS: Due 21 February 2025
- February 2025 BAS: Due 21 March 2025
- March 2025 BAS: Due 21 April 2025
- ...and so on
Annual Lodgment
Who: Small businesses with turnover < $75,000 (or < $150,000 for non-profits)
Period: 1 July 2024 - 30 June 2025
Due Date: 28 October 2025 (or 25 February 2026 if using a tax agent)
🎯 Pro Tip: Tax Agent Extended Deadlines
If you use a registered tax or BAS agent, you get automatic extensions:
- Quarterly BAS: Due 25th of second month (vs 28th of first month for self-lodgers)
- Example: Oct-Dec quarter self-lodge = 28 Feb, tax agent = 25 March (extra 25 days!)
This extension gives you more time to gather records and review accuracy, plus professional assistance reduces errors.
How to Lodge Your BAS
Method 1: ATO Business Portal (Online Portal)
Prerequisites:
- myGovID: Digital identity app (download from App Store/Google Play)
- Relationship Authorisation Manager (RAM): Link your myGovID to your business ABN
Step-by-Step Process:
- Access the Portal
- Visit bp.ato.gov.au
- Log in using myGovID app (authenticate on your phone)
- Navigate to BAS
- Dashboard → "Lodgments" → "Activity Statements"
- Select the current period (e.g., "Oct-Dec 2024 Quarterly BAS")
- Complete the Form
- Enter G1 (Total Sales - GST exclusive)
- Enter 1A (GST on Sales = G1 ÷ 11)
- Enter 1B (GST on Purchases - from tax invoices)
- Label 7 auto-calculates (1A - 1B)
- If applicable: Enter W1, W2 (PAYG withholding), other labels
- Review and Submit
- Double-check all figures
- Confirm accounting method (cash/accrual)
- Click "Lodge"
- Pay (if you owe GST)
- BPAY (use unique reference number from BAS)
- Direct debit from bank account
- Credit/debit card (via ATO portal)
- Payment plan (if struggling - contact ATO)
Method 2: Accounting Software (Xero, MYOB, QuickBooks)
Modern accounting software integrates directly with the ATO, making BAS lodgment semi-automated.
Xero BAS Lodgment
- Set Up ATO Integration (one-time setup)
- Xero → Settings → GST Settings → "Connect to ATO"
- Authenticate with myGovID
- Review BAS Report
- Accounting → Reports → "GST Report" or "Activity Statement"
- Xero auto-populates G1, 1A, 1B from your recorded transactions
- Verify Amounts
- Check G1 matches your invoices
- Ensure 1B includes all claimable GST (review expense coding)
- Lodge Electronically
- Click "File with ATO" button
- Xero sends BAS directly to ATO via SBR (Standard Business Reporting)
- Pay GST
- Xero can create payment file for your bank
- Or manually pay via BPAY/bank transfer
MYOB BAS Lodgment
- Similar process to Xero
- GST → Prepare BAS/IAS → Lodge Online
- MYOB also provides BAS lodgment via SBR
QuickBooks Online BAS Lodgment
- GST Center → Prepare BAS
- Review and lodge via ATO integration
Software Comparison for BAS
| Software | BAS Integration | Auto-Calculation | Price (from) | Best For |
|---|---|---|---|---|
| Xero | ✅ Yes | ✅ Yes | $35/month | Most businesses, best UI |
| MYOB | ✅ Yes | ✅ Yes | $30/month | Australian businesses, strong support |
| QuickBooks | ✅ Yes | ✅ Yes | $20/month | Budget-conscious, simple needs |
| Wave | ❌ No (manual) | ⚠️ Partial | Free | Very small businesses, tight budgets |
Method 3: BAS Agent or Tax Agent
A registered BAS agent or tax agent can prepare and lodge your BAS on your behalf.
When to Use an Agent:
- You're time-poor and prefer to outsource compliance
- Your BAS is complex (multiple entities, consolidation, adjustments)
- You want professional review to minimize errors and penalties
- You want extended lodgment deadlines (25th vs 28th)
Costs:
- BAS agent (quarterly): $150-400 per quarter
- Accountant (BAS + tax return): $800-2,000/year
- Full-service bookkeeper + BAS: $300-800/month
How to Find a Registered Agent:
- Search the Tax Practitioners Board Register
- Look for "BAS Agent" or "Tax Agent" registration
- Check reviews and ask for referrals
Late Lodgment Penalties and Consequences
Failure to Lodge (FTL) Penalty
If you don't lodge your BAS by the due date, the ATO imposes a Failure to Lodge (FTL) penalty:
| Overdue Period | Penalty Units | Penalty Amount (2025) |
|---|---|---|
| 1-28 days overdue | 1 unit | $313 |
| 29-56 days overdue | 2 units | $626 |
| 57-84 days overdue | 3 units | $939 |
| 85-112 days overdue | 4 units | $1,252 |
| 113+ days overdue | 5 units (maximum) | $1,565 |
*Penalty unit value for 2024-25 financial year: $313. Adjusted annually.
Late Payment Penalty (General Interest Charge)
If you lodge on time but don't pay the GST owed by the due date, the ATO charges:
- General Interest Charge (GIC): Compounds daily
- Current rate: ~9-11% per annum (varies quarterly, set by ATO)
- Example: Owe $5,000, 30 days late = ~$40 GIC ($5,000 × 10% ÷ 365 × 30)
How to Request Penalty Remission
If you have a reasonable excuse for late lodgment, you can request penalty cancellation:
Valid Reasons for Remission:
- Serious illness or death in family
- Natural disaster (flood, fire, etc.)
- ATO system outage preventing lodgment
- First-time offender with good compliance history
How to Request:
- Call ATO: 13 28 66 (business line)
- Explain your circumstances
- Provide evidence (medical certificate, etc.)
- ATO will review and may reduce or cancel penalty
⚠️ Non-Lodgment Consequences
Repeated non-lodgment can lead to:
- Director Penalty Notices: Company directors personally liable for unpaid PAYG withholding
- Garnishee Orders: ATO can seize funds from your bank account
- Legal Action: Court proceedings for recovery
- Business Closure: ATO can wind up companies for persistent non-compliance
Bottom line: Always lodge on time, even if you can't pay immediately (payment plans available).
Common BAS Mistakes to Avoid
The Error: Entering GST-inclusive sales amount in G1 instead of GST-exclusive.
Example of Wrong Calculation:
❌ WRONG: Sales invoiced: $110,000 (incl. GST) G1 entered: $110,000 (incorrect - includes GST!) 1A calculated: $110,000 ÷ 11 = $10,000 Result: Overpaying GST by $1,000! ✅ CORRECT: Sales invoiced: $110,000 (incl. GST) G1 entered: $110,000 ÷ 1.1 = $100,000 (GST-exclusive) 1A calculated: $100,000 ÷ 11 = $9,090.91 Result: Correct GST amount
The Fix: Always divide GST-inclusive amounts by 1.1 before entering in G1.
The Error: Claiming GST credits (Label 1B) for purchases over $82.50 without obtaining a valid tax invoice.
Requirements for Tax Invoice:
- Must say "Tax Invoice" at the top
- Supplier's ABN clearly shown
- Itemized description of goods/services
- GST amount shown separately or statement "includes GST"
- Your business name (for invoices > $1,000)
The Fix: Always request tax invoices from suppliers and keep them for 5 years. If invoice doesn't meet requirements, ask supplier to reissue a compliant one.
The Error: Calculating Label 1A (GST on sales) by multiplying G1 by 0.10 (10%).
Why This is Wrong:
If G1 = $100,000 ❌ WRONG METHOD: $100,000 × 0.10 = $10,000 (overpays GST by $909!) ✅ CORRECT METHOD: $100,000 ÷ 11 = $9,090.91 EXPLANATION: GST is 10% of the GST-exclusive price, which equals 1/11th. If base price = $100, GST = $10, total = $110 GST as fraction of total: $10 ÷ $110 = 1/11 (not 1/10)
The Fix: Always divide by 11, never multiply by 0.10 when calculating GST from GST-exclusive amounts.
The Error: Claiming GST credits on residential rent, bank fees, or other input-taxed items.
Common Input-Taxed Items (NOT Claimable):
- Residential rent (only commercial rent is GST-claimable)
- Bank account fees, credit card fees
- Interest on loans
- Sale of existing businesses (goodwill)
- Financial supplies (lending, borrowing)
The Fix: Review your expense coding in accounting software. Ensure residential rent and bank fees are coded as "No GST" or "Input-Taxed".
The Error: Reporting some transactions on cash basis and others on accrual basis within the same BAS period.
Example of Inconsistency:
- Reporting sales when invoiced (accrual)
- But claiming purchases only when paid (cash)
The Fix: Choose ONE method (cash or accrual) and apply it consistently to all transactions. Most small businesses benefit from cash basis for better cash flow management.
Amending a BAS (Correcting Errors)
If you discover an error after lodging your BAS, you can amend (revise) it:
When to Amend:
- You underreported sales (owe more GST)
- You overreported sales (overpaid GST)
- You forgot to claim some GST credits
- You claimed GST on non-claimable items
How to Amend:
For Errors < $10,000 (or < $20,000 over 4 years):
- Include adjustment in next BAS
- No need to formally revise past BAS
- Add/subtract the correction in Label 1A or 1B on your next BAS
- Note the adjustment in your records
For Errors ≥ $10,000:
- Lodge a revision
- ATO Business Portal → "Lodgments" → "Revisions"
- Select the BAS period with the error
- Enter corrected amounts
- Submit revised BAS
- Pay additional GST (if you owe more) or receive refund (if you overpaid)
Voluntary Disclosure
If you discover significant errors or omissions, you can make a voluntary disclosure to the ATO:
- Benefit: Reduced penalties (up to 80% reduction if voluntary vs 100% penalty if ATO finds error first)
- How: Call ATO on 13 28 66 or lodge a revision with a cover letter explaining the error
Payment Plans and Financial Hardship
Can't Pay Your BAS on Time?
If you're struggling to pay the GST owed, do NOT ignore it. The ATO offers several options:
Option 1: Payment Plan
- What it is: Spread GST payments over 3-12 months (interest applies via GIC)
- How to set up:
- ATO Business Portal → "Payments" → "Payment Plan"
- Or call 13 28 66
- Requirements: Must lodge BAS on time (payment plan is for payment, not lodgment extension)
- Example: Owe $10,000, payment plan over 10 months = $1,000/month + GIC (~$80-100 total interest)
Option 2: Deferral (Financial Hardship)
- What it is: Temporary postponement of BAS lodgment or payment
- Who qualifies: Businesses facing genuine financial hardship (natural disaster, serious illness, economic downturn impact)
- How to request: Call ATO on 13 28 66, explain circumstances, provide evidence
- Outcome: ATO may grant 3-6 month deferral or reduce penalties
Option 3: Early Engagement and Relief
- What it is: Proactive contact with ATO before due date to discuss difficulties
- Benefit: ATO is more lenient if you engage early vs ignoring debt
- How: Call 13 28 66 before due date, explain situation, propose payment plan
⚠️ WARNING: Never Ignore BAS Debt
Ignoring GST debt leads to:
- Compounding interest (GIC at ~10%/year)
- Escalating penalties (up to $1,565 FTL penalty)
- Director Penalty Notices (directors personally liable)
- Legal action, garnishee orders, business closure
Always engage with ATO early - they're surprisingly flexible if you communicate and show good faith.
BAS Checklist: Never Miss a Step
📋 Monthly BAS Preparation Checklist
- ☐ Reconcile bank accounts - Ensure all transactions recorded
- ☐ Code expenses correctly - GST claimable vs non-claimable
- ☐ Collect tax invoices - Ensure all purchases > $82.50 have valid tax invoices
- ☐ Review sales invoices - Check all issued invoices are recorded
- ☐ Track cash/accrual consistently - Don't mix methods
📊 Quarterly BAS Lodgment Checklist
- ☐ Calculate G1 - Total sales (GST-exclusive)
- ☐ Calculate 1A - GST on sales (G1 ÷ 11)
- ☐ Calculate 1B - GST on purchases (sum of tax invoice GST)
- ☐ Calculate Label 7 - Net GST (1A - 1B)
- ☐ Complete W1, W2 - If you have employees (PAYG withholding)
- ☐ Review for errors - Double-check all figures
- ☐ Lodge on time - By 28th (or 25th if using tax agent)
- ☐ Pay GST - By due date (BPAY, EFT, credit card, or payment plan)
- ☐ Save confirmation - Keep lodgment receipt for records
- ☐ Update cash flow forecast - Plan for next quarter's GST
Video Walkthrough: How to Lodge BAS Online
Watch our step-by-step video guide showing how to complete and lodge your BAS through the ATO Business Portal. This 15-minute walkthrough covers login, data entry, label calculation, and submission.
🎥 Video Chapters
- 0:00 - Introduction & ATO Business Portal Login
- 2:15 - Entering Sales Data (Label G1)
- 5:30 - Calculating GST on Sales (Label 1A)
- 7:45 - Adding Purchase GST Credits (Label 1B)
- 10:20 - Reviewing Net GST (Label 7)
- 12:00 - Submitting Your BAS
- 13:30 - Payment Options & Confirmation
Alternative Resources
Official ATO video tutorials:
BAS Resources and Support
ATO Resources
- ATO BAS Helpline: 13 28 66 (8am-6pm weekdays)
- ATO Business Portal: bp.ato.gov.au
- ATO Small Business Newsroom: Latest updates and guidance
- ATO app: myDeductions app for tracking expenses on the go
Free ATO Support Programs
- Small Business Bus: Free face-to-face ATO support (visits regional areas)
- Webinars: Free ATO webinars on BAS lodgment
- Tax Help: Free tax help for low-income earners
Professional Associations
- Institute of Certified Bookkeepers: Find a certified bookkeeper
- CPA Australia / CA ANZ: Find a chartered accountant
- Tax Practitioners Board: Verify tax agent credentials