Monthly vs quarterly BAS: which reporting cycle suits a sole trader?

Quarterly: the default

Four statements a year, each covering three months, due on the 28th of the month after the quarter ends: 28 October, 28 February, 28 April and 28 July. If you have a PAYG instalment it sits on the same form and is paid on the same date. Registered agents generally get about four extra weeks on three of the four quarters.

Quarterly suits a business that owes GST most quarters, because you hold the money for up to four months before paying it over, and it keeps the admin to four sessions a year. The cost is that the figures are bigger and, if you have not set money aside, the payment can hurt. The full calendar is in BAS due dates.

Monthly: compulsory for some, useful for a few

Businesses with GST turnover of $20 million or more must report monthly. Below that it is optional, and a small number of sole traders choose it. Monthly statements are due on the 21st of the following month, so July is due 21 August and June is due 21 July. That is a shorter gap after the period ends than quarterly gives you.

Monthly makes sense when:

• You are usually in a refund position. Businesses whose sales are GST-free but whose purchases carry GST, such as some health providers, NDIS providers and exporters, get their refund twelve times a year instead of four.
• You have just made a large purchase. A $40,000 vehicle carries about $3,600 of GST. Monthly gets it back weeks earlier. Some businesses switch to monthly for a year around a big spend, then switch back.
• You prefer smaller, more frequent payments and are disciplined about the admin.

The cost is twelve lodgements instead of four. With software that builds the statement from an uploaded bank statement the extra time is small; by hand it is significant.

Annual: for voluntary registrants under the threshold

If you registered for GST voluntarily and your GST turnover is under $75,000 ($150,000 for non-profits), you may be able to elect to report and pay GST annually. You lodge an annual GST return, generally due when your income tax return is due, or 28 February if you are not required to lodge a return. No quarterly BAS at all.

The catch is that a whole year’s GST arrives as one bill, so setting the money aside through the year matters even more. And if your turnover crosses the threshold you lose the option and move to quarterly. The ATO will tell you in online services whether you are eligible.

Paying GST by instalment

There is a fourth arrangement worth knowing about. Eligible small businesses can choose to pay a quarterly GST instalment worked out by the ATO, then lodge one annual GST return to reconcile the year. It smooths cash flow and reduces quarterly effort, but it only suits a business whose GST position is steady. Eligibility and mechanics change; check the ATO before electing it.

How to change your cycle

You can change your reporting cycle through ATO online services or by calling the ATO, or through your agent. The change generally takes effect from the start of the next quarter, and if you move to monthly you are expected to stay on it for at least twelve months. Moving from quarterly to annual requires the eligibility above.

Before switching, look at your last four BAS. If every one was a payment, quarterly is probably right. If most were refunds, monthly is worth the extra lodgements. If your turnover is small and steady, annual could remove the quarterly chore entirely.

Whatever the cycle, keep the inputs monthly

The reporting cycle decides how often you lodge. It should not decide how often you do the books. Uploading each month’s bank statement, checking the categories and glancing at the GST position takes a few minutes, and it means a quarterly or annual statement is a review rather than a reconstruction. FlowFi shows the running GST position for the current period whichever cycle you are on, so the statement is ready the day the period closes.