Why You Need to Get BAS Right
If you’re a small business owner in Australia, you probably already know that Business Activity Statements (BAS) are an important part of the business cycle for most businesses. What’s less well-known is how easy it is to make costly BAS errors—even with accounting software and a bookkeeper on your side.
Whether you lodge your own BAS or rely on someone else, mistakes like claiming the wrong GST or forgetting PAYG withholding can lead to penalties, audits, and unnecessary stress.
And the worst part? Most of these errors are completely avoidable with a bit of knowledge and a solid process.
🔎 Mistake #1 – Claiming GST When You’re Not Entitled To
GST on Unregistered Suppliers
Just because a receipt has GST printed on it doesn’t mean you can claim it. The ATO requires that the supplier be registered for GST, and I’ve seen plenty of sole traders and market vendors who aren’t.
No ABN and no GST registration? That means no GST credit for you. Before you claim, always check that your supplier is registered. You can verify this using the ABN Lookup tool.
GST on Private or Mixed-Use Expenses
It’s tempting to claim GST on everything, but meals, entertainment, and vehicles used partly for personal reasons are common traps.
A client of mine once included GST from their Friday team lunches. Harmless, right? Unfortunately, entertainment expenses are generally not deductible, and the ATO is quick to spot that.
How to Protect Yourself
Make sure you get valid tax invoices, confirm the GST amount, and ensure the ABN on the invoice is GST-registered. If you’re not sure—don’t guess. Ask your accountant or refer to the ATO’s guide on claiming GST.
🔄 Mistake #2 – Mixing Up Cash and Accrual Accounting
The Difference Between Cash and Accrual
Here’s a quick refresher. If you’re on cash basis, you only report what’s been paid or received. If you’re on accrual, you report what’s been invoiced—regardless of payment status.
Most small businesses use cash basis for BAS and accrual for tax. But if you’re entering bills and invoices into software and treating them as paid when they’re not, you’re likely overreporting your GST and overpaying.
Real-World BAS Error
A client using Xero had entered a $22,000 invoice but hadn’t been paid. BAS was lodged on an accrual basis by mistake. That $2,000 in GST? Came straight out of cash flow for no reason.
Tip for BAS Method Accuracy
Check your ATO portal for your registered method. Make sure your accounting software and reports match it. If they don’t, get help from a professional.
💳 Mistake #3 – Lodging BAS Without Reconciling Bank Accounts
Why Reconciliation Matters
Your bank balance might look healthy, but if your transactions aren’t coded and reconciled, your BAS will be reporting incorrect amounts. I’ve seen clients with thousands in GST sitting in suspense accounts—because the system doesn’t know what to do with those uncoded entries.
The Risk of ATO Amendments
Once you lodge your BAS, it’s locked in. You can only correct it through an amendment, which unfortunately attracts ATO interest. Consistent BAS amendments are a red flag for ATO auditors.
What You Should Do Instead
Don’t rush your BAS. Reconcile every bank account, match every transaction, and make sure the GST coding is accurate. Only lodge once you’re confident everything’s up to date.
📊 Mistake #4 – Expense Coding Errors That Skew Your BAS
Common Coding Issues
This one’s more common than you’d think. I’ve had clients claim GST on stamp duty, bank fees, or even ATO payments—none of which include GST.
On the flip side, things like capital purchases—vehicles or equipment—often get misclassified as general expenses, meaning the full GST isn’t claimed when it should be.
Software Doesn’t Always Get It Right
Relying too heavily on automation in your accounting software can lead to silent BAS errors. Xero, MYOB, QuickBooks—they all make coding suggestions, but they can’t always tell the difference between a loan repayment and a deductible expense.
Best Practice
Set up consistent rules in your chart of accounts and review them regularly. Always verify automated coding suggestions before accepting them. A structured system leads to more accurate reporting—and less stress at tax time.
🧾 Mistake #5 – Forgetting to Report PAYG Withholding
What is PAYG Withholding?
If you employ staff and withhold tax from their wages, that amount needs to be reported in your BAS. Even if it’s only one part-time employee, the obligation still applies.
The Consequences of Forgetting
Missing PAYG withholding on your BAS leads to hefty late payment penalties and interest. Also, if PAYGWH is not paid, the wage expense is not tax deductible!
We know of a taxpayer who missed two quarters of PAYGWH. The ATO hit them with interest and denied over $40,000 in deductible wages. It was completely preventable.
How to Avoid This BAS Error
Make sure your payroll software is integrated with your BAS reporting. Review your BAS before lodging to confirm the PAYG figures are entered. This small habit could save you thousands.
💡 Bonus Tip – Don’t Guess on GST or BAS Reporting
If you’re unsure about how to treat a transaction, don’t just pick a code and hope for the best. BAS errors often start with small assumptions that grow into big problems.
Use the ATO’s resources, ask your bookkeeper, or give your accountant a quick call. A five-minute check now can save hours—and money—later.
📆 Stay Ahead of BAS Deadlines
Why Regular Reconciliation Makes BAS Easier
Leaving BAS to the last minute is a recipe for mistakes. Reconcile your accounts weekly or fortnightly and make BAS part of your end-of-month checklist.
Create a Repeatable BAS Process
Not only will you lodge with confidence, but you’ll also reduce the risk of penalties, amendments, and ATO scrutiny.
📣 Ready to Get Your BAS Right?
If BAS still feels confusing or stressful, you’re not alone. At A2B, we offer a complete BAS review and lodgement service—with a No Tax Surprise Guarantee.
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