If you’re running a small business, you’ve probably heard of BAS—but what does it really mean? This guide unpacks BAS basics (Business Activity Statement) so you can handle it with confidence.
Attention: Why BAS Matters
Few words create more stress for small business owners than “Your BAS is due.”
Every quarter I hear clients say things like:
- “I thought I only had to lodge if I made a profit.”
- “I didn’t realise the ATO wanted it even if I had no sales.”
- “The due date snuck up and I just ignored it.”
If that sounds familiar, you’re not alone. BAS is one of the most common pain points in small business accounting. But once you understand the basics, it becomes routine—and something you can plan around.
What Is BAS (Business Activity Statement)?
A Business Activity Statement (BAS) is a form that the ATO requires businesses to lodge to report and pay certain taxes. Depending on your business structure and registration, BAS can include:
- GST (Goods and Services Tax)
- PAYG Withholding (tax withheld from staff wages)
- PAYG Instalments (your business tax prepayments)
- Fringe Benefits Tax (FBT) instalments
- Luxury Car Tax (LCT)
- Wine Equalisation Tax (WET)
- Fuel Tax Credits
👉 According to the ATO BAS guidelines, if your turnover is $75,000 or more ($150,000 for non-profits), you must be registered for GST and lodge BAS.
One client told me, “I didn’t think I needed to do BAS until my accountant rang me in a panic. I thought GST was optional!” That small misunderstanding almost cost them thousands in penalties.
Business Structure and BAS
Your business structure affects how BAS works.
- Sole traders lodge BAS under their personal ABN.
- Partnerships lodge BAS as a partnership entity ABN.
- Companies lodge BAS through the company ABN.
- Trusts lodge BAS in the name of the trust ABN.
And if you’re not registered for GST but still need to report PAYG instalments or withholding, you may lodge an IAS (Income Activity Statement) instead.
👉 BAS = broader (GST + PAYG + more).
👉 IAS = narrower (no GST).
How Often Do You Lodge BAS?
Most small businesses lodge quarterly. Larger businesses lodge monthly, while some micro businesses may be eligible to lodge annually.
2025–26 BAS due dates:
- Q1: 28 October 2025
- Q2: 28 February 2026
- Q3: 28 April 2026
- Q4: 28 July 2026
Miss these dates, and the ATO may apply penalties.
How BAS is Lodged
You can lodge BAS:
- Online via the ATO Business Portal (using MyGovID).
- Through accounting software like Xero or QuickBooks.
- Via a registered tax or BAS agent.
👉 Agents often get extensions, which can be a lifesaver if you’re running late.
Understanding GST Reporting
GST is central to BAS. You report GST collected on sales minus GST credits on purchases.
Cash vs Accrual Reporting
- Cash basis: You report GST only when payments are received/paid.
- Accrual basis: You report GST on invoices when issued, even if not yet paid.
Most small businesses choose cash because it avoids paying GST before the money is in the bank.
Personal anecdote: I once worked with a tradie who chose accrual reporting. He ended up owing GST on invoices his clients hadn’t yet paid. We switched him to cash basis—his stress levels and GST bill dropped overnight.
Example of BAS in Action
Let’s say your business invoices $110,000 (including $10,000 GST).
You spend $55,000 on expenses (including $5,000 GST).
Your BAS will show:
- GST collected = $10,000
- GST credits = $5,000
- Net GST payable = $5,000
That’s the BAS basics in numbers.
Records You Need to Keep
Here’s the thing—the ATO’s rule is simple: no records, no claim.
You must keep:
- Tax invoices for sales and purchases
- Payroll records
- Copies of lodged BAS
- Logbooks for vehicle deductions
And you must keep them for five years.
👉 For more record-keeping tips, see our guide to Business Success Tools.
Common BAS Mistakes
- Forgetting to lodge because there was “no activity.”
- Claiming GST on personal purchases.
- Not separating business and personal expenses.
- Choosing accrual GST reporting and creating cash flow issues.
- Ignoring PAYG instalments.
- Lodging late and triggering penalties.
One client told me “I thought fuel from my family holiday was deductible because I paid with my business card.” Unfortunately, that kind of mistake is exactly the thing that can trigger an ATO review.
👉 Learn about other traps in our article on Double Up Transactions in your Xero File.
Penalties and Interest
If you miss deadlines, the ATO can issue:
- Failure to lodge penalties (per 28 days late).
- General interest charges on unpaid amounts.
The good news? If you act early, the ATO often agrees to payment plans.
Practical Tips to Make BAS Easier
- Use accounting software that automatically tracks GST and PAYG.
- Reconcile bank accounts monthly, not quarterly.
- Transfer GST collected into a separate bank account.
- Work with a registered agent for extra time and fewer errors.
I had a café client who would panic every quarter. Once we set up automatic bank feeds and a GST savings account, he said, “For the first time in years, I don’t dread BAS.”
So, that’s BAS basics (Business Activity Statements) in Australia:
- BAS is compulsory if you’re GST registered.
- It covers GST, PAYG, and sometimes FBT or industry extras.
- Lodge quarterly (or monthly if required).
- Choose cash vs accrual carefully—it impacts cash flow.
- Keep records for five years.
- Don’t ignore BAS—penalties hurt more than the paperwork.
Handled well, BAS doesn’t need to be a source of stress. With the right systems, it becomes routine—and helps you stay in control of your cash flow.
Next Steps
📅 Want help making BAS simple? Book a meeting today: Book a Meeting Here
📘 Download our free business guides here: Download Free Guides
👉 For more tips, check out our blog on How to Avoid Double Up Transactions in Your Xero File.
Take the stress out of BAS and focus on growing your business with confidence.
