Every quarter, thousands of Australian business owners sit down to lodge their Business Activity Statement with all the enthusiasm of a guitarist tuning up before a gig - only to fumble the opening chord. Whether you're a freelance creative, a tradie, or a growing small business in Penrith, lodging a BAS is one of those unavoidable realities of running a business in Australia. Get it right, and it's just another task checked off the list. Get it wrong, and you're facing penalties, ATO scrutiny, and a whole lot of unwanted noise.
The numbers are sobering: approximately 15% of BAS lodgements contain errors, and the most common mistakes are often entirely avoidable. From incorrect GST coding to PAYG withholding mismatches, the errors that trigger ATO audits and financial penalties are rarely dramatic - they're usually the result of rushed preparation, misunderstood rules, or blind trust in software automation.
This guide breaks down the most common mistakes made when lodging a BAS, explains why they happen, and gives you the clarity to lodge with confidence.
If BAS errors were a chart-topper, incorrect GST coding would be sitting at number one - and it's not even close. According to ACT Tax Group (2025), mistaken GST claims account for a staggering 63% of all BAS errors. That's nearly two thirds of every mistake made when lodging a BAS, all traced back to how transactions are coded.
The most frequent GST coding mistakes include:
Claiming GST on ineligible expenses. Many business owners inadvertently claim GST credits on items that simply don't attract GST. Bank fees, ASIC government fees, council rates, and overseas digital subscriptions (such as international software-as-a-service platforms) are all GST-free from a credit perspective. Claiming them as though they carry GST inflates your credit position and puts you on the ATO's radar.
Mixing up GST-free and taxable supplies. In a retail setting, for example, basic foods like bread and milk are GST-free, while soft drinks attract GST. Incorrectly coding either category - in either direction - will distort your BAS figures.
Double-counting invoices. This includes reporting GST sales twice or double-claiming GST on hire purchase agreements by incorrectly coding both the principal and interest components as taxable.
Missing or invalid tax invoices. For any purchase over $82.50 (including GST), you are required to hold a valid tax invoice showing the supplier's ABN and GST amount before claiming a credit. Claiming credits without this documentation - or claiming from a supplier who isn't actually GST-registered - is a compliance breach with real financial consequences.
To claim a valid GST credit, the ATO requires you to be registered for GST, intend to use the purchase for business purposes, have GST included in the price, and hold valid documentation. The credit must also be claimed within a four-year time limit from the due date of the original BAS.
Incomplete records are behind 31% of BAS disputes, according to ACT Tax Group (2025). The culprit is almost always the same: a BAS lodged before the accounts have been properly reconciled.
When bank feed items are left unmatched at the end of a quarter, transactions either go unreported or are duplicated. If a sale isn't coded, it's not on the BAS - which means you could be understating income and inadvertently attracting ATO attention. On the flip side, unreviewed duplicate entries can inflate your figures just as easily.
The ATO requires businesses to keep records of all sales, fees, expenses, wages, and business costs for five years. This includes all tax invoices, GST records, and payroll documentation. Reconciling bank statements at the close of each reporting period isn't just good housekeeping - it's a compliance requirement.
If you're running cash transactions alongside digital payments, daily till reconciliations and cash sales summaries are essential. Missing cash transaction records are a surprisingly common source of BAS inaccuracies, and a particularly risky one.
Absolutely - and they're the kind of mistake that gets flagged automatically. The introduction of Single Touch Payroll (STP) means that payroll data flows directly to the ATO in real time. When the W1 (gross wages) and W2 (PAYG tax withheld) figures on your BAS don't match your payroll reports for the same period, the ATO notices immediately.
Common PAYG errors when lodging a BAS include:
Payroll records must be reconciled with bank records for wage payments before you lodge. The figures need to be identical. Even a small discrepancy can trigger a review.
This is one of the more technically nuanced common mistakes made when lodging a BAS - and one that many business owners don't even realise they're making. The method you use to account for GST must be consistent and must match your registered accounting basis with the ATO.
Here's the core difference:
| Accounting Basis | When GST is Payable | When GST Credits are Claimed |
|---|---|---|
| Cash Basis | When the sales invoice is paid | When the expense is paid |
| Accrual Basis | When the invoice is issued | On receipt of the invoice |
A business registered on a cash basis that accidentally reports based on invoices issued - rather than payments received - will overstate sales and potentially overpay GST. The reverse creates the opposite problem. Either way, the figures submitted don't reflect reality, and corrections become necessary.
Many small business owners aren't entirely sure which method they're using. If you're uncertain, this is worth clarifying before the next lodgement - not after an ATO query arrives.
According to ACT Tax Group (2025), 48% of late BAS lodgements occur due to incorrect reporting periods or manual calculation delays. Including June transactions in a July BAS is a classic example - and it's the sort of error that's easy to make when you're scrambling at the last minute.
For quarterly lodgers (businesses with a GST turnover under $20 million), the due dates are:
| Quarter | Period | Due Date |
|---|---|---|
| Q1 | July – September | 28 October |
| Q2 | October – December | 28 February |
| Q3 | January – March | 28 April |
| Q4 | April – June | 28 July |
Monthly lodgers (GST turnover of $20 million or more) must lodge by the 21st of the following month.
Miss a deadline, and the Failure to Lodge (FTL) penalty kicks in. As of 2026, one penalty unit equals $330, and the ATO can apply up to five penalty units per late BAS - a maximum of $1,650 for small businesses. That amount doubles for medium entities and multiplies by five for large entities. Even lodging a nil BAS late - one where there's no activity to report - incurs penalties, so there's no such thing as "not worth bothering with."
And if there's an underpayment involved? The General Interest Charge (GIC) compounds daily on any unpaid amounts, which can erode cash flow faster than you'd expect. The good news: voluntarily disclosing errors before the ATO makes contact can reduce penalties by up to 80%.
Yes - but there are rules around how and when. The ATO provides a four-year period of review, within which errors can be corrected. There are two pathways:
For smaller errors where the net GST difference falls within the ATO's correction limits for your business size, you can include the correction in your next lodgement. This is the simpler option and is available for both credit and debit errors, subject to conditions.
For larger discrepancies, multi-period errors, or amounts outside the correction threshold, you'll need to formally revise the original BAS. This involves logging into ATO Online Services or your accounting software, selecting the relevant period, revising the figures, and providing an explanation. The ATO will then issue an adjustment notice, and a refund or additional payment is processed accordingly.
One important note: the ATO cannot process any refunds until all outstanding BAS lodgements are up to date. If you have unresolved lodgements in the queue, your refund is effectively on hold.
Lodging a BAS isn't the most glamorous part of running a business - but it doesn't have to be the most stressful either. The common mistakes made when lodging a BAS are, by and large, preventable. Reconcile your accounts before lodging. Verify your GST coding. Match your payroll figures exactly. Know your accounting basis. And never assume your software has caught everything - automated bank feeds and cloud accounting platforms still require human review.
Creative professionals and small business owners in Penrith and across Sydney face the same compliance obligations as any other business, but often without the accounting infrastructure of larger organisations. Getting the fundamentals right - or having someone in your corner who already knows the score - makes all the difference between a clean lodgement and a costly correction.
Ready to crank your finances up to 11? Let's chat about how we can amplify your profits and simplify your paperwork – contact us today.
As of 2026, the Failure to Lodge (FTL) penalty is $330 per penalty unit, with up to five penalty units applied per late BAS. This means small businesses can face a maximum penalty of $1,650 per overdue lodgement. Medium and large entities face higher penalties. Nil BAS lodgements - where there is no activity to report - are still subject to penalties if lodged late.
The most frequently occurring errors include incorrect GST coding (accounting for 63% of all BAS errors), unreconciled bank accounts (behind 31% of disputes), PAYG withholding mismatches, cash versus accrual basis confusion, and missing or invalid tax invoices for purchases over $82.50 (including GST).
Errors can be corrected either by including the adjustment in your next BAS (for smaller, in-limit corrections) or by formally revising the original BAS through ATO Online Services or your accounting software. The ATO allows corrections within a four-year period of review from the original BAS due date. Voluntary disclosure before ATO contact can reduce associated penalties by up to 80%.
The ATO requires businesses to retain all records relevant to their BAS - including tax invoices, sales records, GST documentation, expense records, and payroll records - for a minimum of five years. This applies regardless of whether records are stored digitally or in hard copy.
Yes - if your business is registered for GST (required once your annual GST turnover reaches or is expected to reach $75,000 or more, or $150,000 for not-for-profits), you are required to lodge a BAS. Creative professionals with mixed revenue streams - some GST-free, some taxable - face additional complexity in correctly classifying their income and expenses, making accurate GST coding particularly important.
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