What is a BAS? The Business Activity Statement explained for sole traders

What a BAS actually is

The Business Activity Statement is how the ATO collects the taxes a business handles on its behalf through the year. The main one is GST: the 10% you add to your invoices and the 10% you paid on business purchases. The BAS nets those two figures off and tells you whether you owe the ATO money or the ATO owes you a refund.

Depending on your situation the same form also collects PAYG instalments (pre-payments of your own income tax), PAYG withholding (tax you take out of employees’ wages, if you have any) and a few less common items such as fuel tax credits. For a sole trader with no staff it is almost always just GST, and often GST plus a PAYG instalment.

Who has to lodge one

You need to lodge a BAS if you are registered for GST. Registration is compulsory once your GST turnover reaches $75,000 in a rolling 12 months ($150,000 for non-profits), and from the first dollar if you drive rideshare or a taxi. You can also register voluntarily below the threshold, in which case the BAS obligation comes with it.

If you are not registered for GST, you do not lodge a BAS. You may still receive an instalment activity statement if the ATO has put you into PAYG instalments, but that is a shorter form with no GST section.

What goes on it

The form looks intimidating because it has labels for every possible situation. Most sole traders only touch a few of them.

• G1, total sales. Everything you sold in the period, including GST and including any GST-free sales.
• 1A, GST on sales. The GST you collected. If everything you sold was taxable, this is G1 divided by 11.
• 1B, GST on purchases. The GST included in business purchases you are entitled to claim. Private purchases and GST-free items such as bank fees do not count.
• T7 or 5A, PAYG instalment. If the ATO has entered you into instalments, the amount or rate appears here.

Businesses with GST turnover under $10 million use the simpler BAS, which drops the detailed labels (G2, G3, G10, G11 and the rest) and only asks for G1, 1A and 1B. If your form shows the full set you can usually still just complete those three.

The amount payable is 1A minus 1B, plus any PAYG instalment. If 1B is bigger than 1A, you get a refund.

How often and when

Most sole traders lodge quarterly. The due dates are 28 October for the July to September quarter, 28 February for October to December, 28 April for January to March and 28 July for April to June. Dates that fall on a weekend or public holiday move to the next business day, and a registered BAS or tax agent can usually get you extra time on three of the four quarters.

Monthly lodgement is compulsory above $20 million turnover and optional below it. If you registered voluntarily and stay under $75,000, you may be able to report annually instead.

How to prepare the figures

The figures come from your business bank account. Every deposit is a potential sale; every payment is a potential purchase with GST in it. The job is to categorise each line, decide whether it carries GST, and add up the three totals.

Two settings affect the numbers. Cash or accruals: most sole traders report on a cash basis, meaning income counts when the money arrives and expenses when they are paid, not when the invoice was dated. Business use: if a purchase is partly private, such as a phone, only the business portion of the GST goes in 1B.

Software like FlowFi does this from an uploaded bank statement: AI categorises each transaction, checks it for GST, and fills in G1, 1A and 1B for the quarter. You review the result and copy the labels into ATO Online. See how to lodge your BAS online for the lodgement steps.

What happens if you lodge late

The ATO can apply a failure-to-lodge penalty for each 28-day period a BAS is overdue, and general interest charge on any unpaid amount. A first late lodgement from a small business is sometimes treated leniently, but do not rely on it.

Two things help. Lodge even if you cannot pay; the penalty is for lodging late, and payment plans are available for the amount. And lodge a nil BAS if you had no activity in the quarter; a registered business still has to lodge.

Common mistakes

• Reporting the net deposit from a platform instead of the gross sale, so G1 is understated and the platform fee is never claimed.
• Claiming GST on items that do not have it: bank fees, overseas subscriptions with no Australian GST, wages, and the private portion of mixed expenses.
• Dividing by 10 instead of 11 to extract GST from a GST-inclusive figure.
• Forgetting the PAYG instalment label, then getting a surprise at tax time.
• Losing the tax invoices needed to support 1B if the ATO asks.