For many Australian small businesses, BAS lodgement is one of those tasks that feels simple in theory, but quickly becomes stressful in practice. You’re not just reporting numbers. You’re reporting them in the format the Australian Taxation Office (ATO) expects, using the right GST codes, and meeting strict due dates that come with real penalties if missed.
A BAS activity statement (also called a Business Activity Statement) is how SMEs report key tax obligations such as GST, PAYG withholding, PAYG instalments, and sometimes FBT instalments. It’s a routine requirement, but it’s also one of the easiest places for small mistakes to turn into ATO queries, payment shocks, or compliance headaches.
The good news? BAS doesn’t have to be complicated. Once you understand what the BAS is actually asking for and how to set up your accounting system correctly, staying compliant becomes far more manageable.
In this guide, we break down BAS reporting in plain English, explain what confuses SMEs most, and show how to stay ATO-ready with confidence.
Table of Contents
What Is a Business Activity Statement (BAS)?
A Business Activity Statement (BAS) is a form submitted to the Australian Taxation Office (ATO) that reports your business’s tax obligations for a specific period (monthly, quarterly, or annually).
Most Australian SMEs think BAS is “just GST reporting,” but it’s broader than that. Your BAS may include:
- GST collected and paid (based on your sales and purchases)
- PAYG withholding (tax withheld from employee wages)
- PAYG instalments (prepayments toward your annual income tax)
- Fringe Benefits Tax (FBT) instalments, if applicable
- Other ATO reporting obligations depending on your business type
In simple terms, BAS is how the ATO checks whether your business collects, withholds, and pays the right taxes throughout the year.
Your BAS lodgement frequency depends on your business size, GST turnover, and ATO registration requirements. Many SMEs lodge quarterly, while some businesses (especially growing businesses or those with higher turnover) may lodge monthly.
Whether you’re managing BAS internally or relying on external support, accuracy matters because BAS errors can trigger ATO follow-ups, payment surprises, and compliance risk.
Who Needs to Lodge a BAS in Australia (and When It Applies to SMEs and Sole Traders)
Not every business in Australia is required to lodge business activity statements, but for most SMEs, BAS reporting becomes mandatory once certain tax registrations are in place.
In general, you must lodge a BAS activity statement if your business is registered for:
- GST (Goods and Services Tax)
- PAYG withholding (if you employ staff or pay contractors under certain arrangements)
- PAYG instalments (if the ATO requires you to pay income tax progressively)
- Other obligations that the Australian Taxation Office BAS system tracks
BAS Statements for Sole Traders: Do You Need One?
When Do You Need to Register for GST?
Most SMEs must register for GST if their business has a GST turnover of $75,000 or more per year (or $150,000 or more for non-profit organisations). Once registered, BAS lodgement becomes a compliance requirement whether you’re profitable or not.
What If You Don’t Lodge BAS on Time?
The ATO can apply penalties for late lodgement, and repeated delays may increase compliance scrutiny. Even if you have no activity in a period, you may still need to lodge a “nil” BAS.
For SMEs, the key risk is assuming BAS is optional when, in reality, it becomes mandatory based on your registrations and turnover. Understanding this early helps avoid unnecessary ATO issues later.
BAS Due Dates and Lodgement Frequency (Monthly, Quarterly, or Annually)
One of the most confusing parts of business activity statements is understanding how often you need to lodge and what deadlines apply. The frequency of your BAS activity statement is generally determined by your annual turnover and the reporting cycle set by the Australian Taxation Office BAS system.
Here’s a simple breakdown.
If Your Annual Turnover Is More Than $20 Million
Lodge: Monthly
Deadline: Your BAS must be submitted within 21 days of the end of each month.
This reporting cycle is typically applied to larger businesses because the ATO expects more frequent tax reporting and payment activity.
If Your Annual Turnover Is Less Than $20 Million
Lodge: Quarterly
Deadlines:
- Quarter 1 (July–September): due 28 October
- Quarter 2 (October–December): due 28 February
- Quarter 3 (January–March): due 28 April
- Quarter 4 (April–June): due 28 July
If Your Turnover Is Less Than $10 Million
You may be eligible to lodge BAS annually, but there’s an important catch:
Even if you lodge once per year, you may still be required to pay quarterly GST instalments based on your expected GST liability.
This can surprise many SMEs who assume “annual lodgement” means “annual payment.”
If Your Annual Turnover Is Less Than $75,000 (or $150,000 for Non-Profits)
Lodge: Annually
Deadline: Submitted together with your income tax return
This category often includes micro-businesses and bas statements for sole traders, particularly those who are not registered for GST.
Also Read: Key 2026–27 Tax Return Deadlines and How to Stay Compliant
Understanding your BAS schedule is critical because missing deadlines can lead to penalties and unnecessary ATO attention, even if the amounts involved are small.
What Information Is Included in a BAS? (GST, PAYG Withholding, Instalments and More)
A BAS activity statement isn’t only about GST. Depending on your ATO registrations, your business activity statements may include several tax obligations that SMEs must report accurately.
Here’s what a BAS commonly covers:
GST on Sales and Purchases
If you’re registered for GST, you must report:
- GST collected on sales
- GST credits claimed on eligible purchases
PAYG Withholding
PAYG Instalments
FBT Instalments (If Applicable)
If your business provides certain employee benefits, BAS may also include Fringe Benefits Tax instalments.
Ultimately, your BAS is only as accurate as your bookkeeping. If your records are incorrect, your BAS reporting will be too, regardless of the software you use.
Sample Business Activity Statement (BAS): How to Read It and What the Fields Mean
GST Section (G Labels)
- G1 – Total Sales: Total income for the period (taxable + GST-free sales)
- G10 – Capital Purchases: Asset purchases like equipment or vehicles
- G11 – Non-Capital Purchases: Day-to-day expenses such as rent, software, marketing
- 1A – GST on Sales: GST collected from customers
- 1B – GST on Purchases: GST credits claimed on business expenses
PAYG Withholding (W Labels)
- W1 – Total Salary, Wages and Other Payments: Gross wages paid
- W2 – Amount Withheld: PAYG tax withheld and payable to the ATO
PAYG Instalments (T Labels)
- T1 – PAYG Instalment Income: Income used to calculate instalments
- T7 – PAYG Instalment Amount Payable: Instalment due to the ATO
Common BAS Mistakes That Put SMEs at Risk with the ATO
Most BAS issues happen due to incorrect bookkeeping, not intentional errors. Even small mistakes can impact your business activity statements and increase ATO compliance risk.
Common BAS mistakes include:
- Incorrect GST coding on sales or purchases
- Claiming GST credits without valid tax invoices
- Mixing personal and business expenses (common in bas statements for sole traders)
- Payroll and PAYG withholding errors, especially when systems don’t align
- Reporting transactions in the wrong period, affecting GST and PAYG amounts
- Late BAS lodgement or rushing to lodge without proper checks
Need help with BAS accuracy and ATO compliance?
Speak to our team about outsourced accounting support for Australian SMEs or fill out the Befree contact form to discuss your requirements and get a tailored solution