Lodging your Business Activity Statement (BAS) might seem like a routine part of running a business in Australia, but it’s far from simple. Even a minor oversight or miscalculation can result in substantial penalties, cash flow problems, or an audit from the Australian Taxation Office (ATO). Understanding the common BAS mistakes and how to avoid them is not just smart—it’s essential to protecting your bottom line.
Whether you’re a sole trader or running a growing small business, this guide will walk you through the biggest BAS errors, explain how they happen, and show how working with a qualified accountant or BAS agent can keep you compliant and financially secure.
📄 What Is a BAS and Why Accuracy Is Critical
A Business Activity Statement (BAS) is the form businesses submit to the ATO to report and pay taxes, including:
- Goods and Services Tax (GST)
- Pay As You Go (PAYG) withholding
- PAYG instalments
- Fuel tax credits
- Fringe Benefits Tax (FBT) instalments
If you’re registered for GST or employ staff, you’re probably required to lodge a BAS, either monthly, quarterly, or annually.
Getting your BAS right is crucial because errors can:
- Lead to ATO penalties and fines
- Trigger an ATO audit
- Cause cash flow problems due to incorrect GST credits or PAYG amounts
⚠️ 10 Common BAS Mistakes That Could Cost You Thousands
Below are the most frequent mistakes business owners make with BAS lodgements, and how to avoid them.
1. Claiming GST on Non-GST Purchases
Keyword: GST mistakes
A classic error is claiming GST input credits on purchases where GST was never charged. For example:
- Imported goods
- Purchases from businesses not registered for GST
Why It Happens:
- Misunderstanding of GST eligibility
- Assuming all receipts include GST
Solution:
- Always check the tax invoice and ensure the supplier is GST-registered.
2. Double Counting Income
Keyword: BAS errors
If you use both manual spreadsheets and software (e.g., Xero, MYOB), you might enter the same income twice.
Example:
- Uploading PayPal and bank data separately
- Manually entering sales that were already imported
Result:
- Overstated income
- Excess GST payable
Solution:
- Use automated systems with proper reconciliation
- Only record each transaction once
3. Misclassifying Transactions
Incorrectly categorising income and expenses leads to GST misreporting.
Common Issues:
- Applying “GST Free” to items that include GST
- Confusing “Input Taxed” with GST-free
Solution:
- Learn the difference between standard-rated, input-taxed, and GST-free supplies
- Use accurate GST tax codes in your accounting software
4. Not Reconciling Before Lodgement
BAS should only be lodged after reconciling your bank accounts, expenses, and invoices.
Consequences:
- Lodging based on incomplete or inaccurate data
- Reporting GST on unpaid invoices (if on a cash basis)
Solution:
- Reconcile accounts monthly
- Use software tools for automated reconciliation
5. Not Adjusting for Previous BAS Errors
If you made a mistake in a prior BAS, you can’t just ignore it.
Example:
- Overclaimed GST credit in Q1 needs adjusting in Q2
Solution:
- Use the adjustment fields on your next BAS
- Work with a BAS agent to handle retrospective corrections
6. Lodging BAS Late
Keyword: incorrect BAS lodgement
Missing your BAS deadline means more than a slap on the wrist. The ATO can issue Failure To Lodge (FTL) penalties.
Late Penalties:
- $313 per 28-day period (as of 2025), up to a max of $1,565
- Interest charges on outstanding amounts
Solution:
- Use calendar alerts or software reminders
- Hire a BAS agent to access extended due dates
7. Not Reporting All Income
Especially risky for:
- Cash-based businesses
- Online sellers with multiple sales platforms
Why It’s a Problem:
- The ATO uses data-matching tools to detect undeclared income
- Can lead to audits, back-payments, and penalties
Solution:
- Declare all income sources, including cash
- Cross-check against payment processors like Stripe, PayPal, Square
8. Ignoring PAYG Obligations
If you have employees or make certain business profits, you’re required to report and pay PAYG.
Mistakes Include:
- Omitting PAYG withholding amounts
- Underreporting PAYG instalments
Solution:
- Review employee payroll records regularly
- Confirm PAYG obligations with your accountant
9. Missing Fuel Tax Credits
Many businesses forget to claim fuel tax credits, even though they are eligible.
Eligibility Includes:
- Construction businesses
- Agricultural and fishing operators
- Any business using fuel off public roads
Solution:
- Keep detailed records of fuel usage
- Work with an accountant to claim credits properly
10. Using Spreadsheets Instead of Accounting Software
Manual data entry increases your chance of human error.
Problems With Spreadsheets:
- No tax code validation
- Limited audit trail
- Easy to miscalculate totals
Solution:
- Use cloud accounting software (e.g., Xero, MYOB, QuickBooks)
- Automate your BAS report generation
🤝 How Accountants and BAS Agents Help Prevent BAS Errors
BAS agents and accountants offer far more than just tax lodgement. They ensure accuracy, compliance, and strategic planning. Here’s how:
✅ GST Accuracy and Code Verification
- They verify GST claims are based on eligible purchases
- Correct misclassified transactions
✅ Reconciliation and Record Checking
- Identify discrepancies before you lodge
- Adjust previous BAS errors properly
✅ BAS Lodgement Extensions
- Registered agents get automatic extensions on due dates
- Reduce your risk of late fees
✅ ATO Representation
- Handle ATO queries or audits on your behalf
- Lodge amendments if needed
✅ Strategic Tax Planning
- Help you manage PAYG instalments
- Offer cash flow forecasting tied to tax obligations
✨ Need help avoiding costly BAS errors? Find a registered BAS accountant near you at Finistry.com.au — Australia’s go-to directory for financial professionals.
🚨 ATO Penalties for BAS Errors: What You Risk
❌ Failure to Lodge on Time
- From $313 to $1,565 depending on how late you are
❌ Administrative Penalties
- Up to 75% of the tax shortfall
- Possible reductions for voluntary disclosure
❌ Interest Charges
- General Interest Charge (GIC) applied daily on unpaid amounts
❌ Risk of ATO Audits
- Poor BAS history can flag your business for review
- Audits can span multiple years and involve financial scrutiny
✅ Best Practices to Avoid BAS Mistakes
- 📊 Use cloud-based accounting software with BAS features
- 📃 Keep all tax invoices and digital receipts organised
- 🕑 Set reminders for lodgement deadlines (or use a BAS agent)
- 💼 Separate business and personal expenses
- 🤓 Stay informed about ATO updates and thresholds
- 📈 Run monthly checks and reconcile bank accounts regularly
❓ FAQs: People Also Ask
What happens if I make a mistake on my BAS?
You may need to amend the BAS, repay any GST or PAYG shortfalls, and could face penalties or interest from the ATO.
Can I correct a BAS after lodging?
Yes. You can lodge a revision via your accounting software, through a BAS agent, or directly on the ATO portal within 4 years of the original lodgement.
How do I avoid BAS errors?
- Use automated accounting tools
- Reconcile monthly
- Hire a BAS agent to review your reports before submission
Do I need an accountant to lodge my BAS?
Not legally. But using a registered BAS agent or accountant can significantly reduce the risk of errors and penalties.
How much does it cost to fix a BAS error?
Fees vary. BAS agents may charge $150–$400 depending on the complexity of the correction and how far back it goes.
🚀 Conclusion: Don’t Let BAS Mistakes Derail Your Business
Your BAS is more than a form—it’s a snapshot of your business’s tax obligations. Mistakes in your BAS can lead to serious financial repercussions, not to mention stress and wasted time.
By understanding the most common BAS mistakes and working with a qualified professional, you can:
- Stay compliant
- Avoid unnecessary penalties
- Focus on growing your business
✨ Looking for trusted help? Visit Finistry.com.au to find a BAS agent or accountant near you who can get your BAS right, every time.
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