Don't Let BAS Mistakes
Kill Your Cash Flow
Professional Business Activity Statement preparation covering GST and PAYG instalments means no more under-claiming or missed deadlines!
Vi Nguyen, CA (ANZ), CPA (USA)
ATO letter got you stressed? Or do you have that nagging feeling you're doing your BAS wrong?
Common BAS mistakes can cost small business owners, like you, serious money
Mistake #1 – Missing Deadlines and Not Paying the Full Amount
It’s quite easy to forget a deadline because life happens… but if you don’t pay your BAS tax liabilities when they’re due, you might be up for interest payments in addition to the tax owed, along with other penalties like failure to lodge on time.
Fines aren’t tax deductible, and from 1 July 2025, neither is the general interest charge (GIC), so you can’t claim it on your tax – which means it’s just money down the drain. There are strict deadlines for lodgement and payment of your BAS. See ATO guidance on BAS due dates can be found here.
Mistake #2 – Not Including Purchases and GST Credits (“Ripping Yourself Off”)
Let’s say you’re a plumber and you’re contracted through a building company. You’ve invoiced them $13,200 with $1,200 being for GST. Your BAS comes around and you lodge on time and pay by the deadline. All good, right?
It seems good, but then a few months down the track, you have a huge job that meant you had to buy plumbing equipment worth $5,500. You find that you don’t have much cash and now you’re wondering why you’re paying so much tax… you think that something might not be right, but you’re not entirely sure…
Your suspicions are right. There is something you’ve been missing, and that’s the GST credits you’re not claiming!
As a plumber, you would have been purchasing items and travelling in your car (paying for fuel) and much more! Many of these purchases have GST that you can claim against the $1,200 in GST from your earnings, to reduce it from $1,200 to a lower amount!
If you’re only considering the GST from your income, you’re ripping yourself off! You need to also consider the GST credits to get to your final GST owing amount.
Mistake #3 – Claiming GST for Non-GST Items
Not every purchase has GST, and there are rules around it. For example, if your supplier isn’t registered for GST and you claim GST on their invoice, that’s a big no-no. When you claim GST on purchases that don’t have GST, you’re technically understating your tax owed. This can cost you $$$ down the line if you’re charged penalties for shortfalls in payment.
Mistake #4 – Not Modifying/Varying Your PAYG Instalments Where Appropriate
PAYG Instalments are amounts that you need to pay to ‘pre-pay’ your tax throughout the year. But part of that calculation is based on your prior tax return lodged. Life changes and so does business… if your situation is different and you don’t anticipate paying the same level of tax, by prepaying the given amounts, you’re ‘overpaying’ your pre-payments and cutting short your own cash flow.
You can vary your instalments, but if you underreport, you can get into trouble. That’s why it’s important to get the calculations right to make your PAYG Instalments accurate.
Also, just be aware that PAYG Instalments are different from PAYG Withholding, which is taxes withheld from employee pay. If you have no idea what the difference is and are paying employees, you may find our payroll package page useful.
Let professionals handle your Business Activity Statements or Instalment Activity Statements, and get peace of mind knowing that your BAS and/or IAS are being done correctly and on time (avoiding penalties and stress!)
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My BAS is behind, I’m getting ATO letters, what do I do?
It is stressful to receive ATO letters, especially when they’re unannounced and you didn’t realize that you had to do what they’re saying you had to do!
As ATO letters depend on your specific situation, dealing with the letter requires careful consideration and action. Ignoring an ATO letter is not a good idea as it could make your situation worse.
Useful Money Stuff Accounting’s principal accountant has experience in helping late lodgers with getting back on track.
If you are in this situation, please get in touch with us with a consultation (https://usefulmoneystuff.com/online-accountant-consult/) to see if we can assist you.
It is stressful to receive ATO letters, especially when they’re unannounced and you didn’t realize that you had to do what they’re saying you had to do!
As ATO letters depend on your specific situation, dealing with the letter requires careful consideration and action. Ignoring an ATO letter is generally not a good idea as it could make your situation worse.
Useful Money Stuff Accounting’s principal accountant has experience in helping late lodgers get back on track.
If you are in this situation, please get in touch with them for a consultation to see if they can assist you.
What you need to provide for BAS preparation and lodgement by an accountant
Getting your BAS done should be a relatively simple process as long as you have good bookkeeping records.
What is a Bookkeeping File?
A bookkeeping file is kind of like a diary of all the business activities that your business is doing, but in a format that’s easy to get important information from. For example, if you did electrical work for a house, the details that would be recorded would be the quoted amount, address of service, date of service, and anything else that’s important.
The Challenge
The issue is that this ‘diary’ needs to be up-to-date and needs to contain all the complete information about your business. It also needs to be checked against other sources, like your bank account, to make sure what you’re recording is matching up with your real-life bank account.
If you’ve ever calorie counted or kept a diary, you’ll know how easy it is to fall behind or forget something.
What You Need Before BAS Preparation
So, before they can get your BAS prepared, you need to have a clean, good bookkeeping file. If you don’t have that, please get in touch to let them know your situation, and they can advise.
You’ll also need to make sure that:
- You have all your receipts/invoices
- You can provide your bank statements
The Process
If your bookkeeping is done correctly, typically the accounts are reviewed, any adjustments are made, your quarterly accounts are finalized, and then your BAS is set up for you to review and sign. Once you sign, they can lodge it for you.