The Business Activity Statement is the most frequently lodged tax document for most Australian small businesses — quarterly or monthly, every period, for the life of the business. Given the volume of BAS lodgements a bookkeeper handles across a client base, even a small error rate translates into a meaningful number of incorrect returns.
Some mistakes are small and self-correcting (minor GST classification errors on low-value purchases). Others compound quietly and become expensive to unwind years later. This guide covers the most common errors and how to build processes that catch them before they leave your desk.
1. Miscoding GST-Free vs Taxable Supplies
The most frequently audited BAS item is the GST treatment of supplies. The most common errors:
- Treating fresh food as taxable (most fresh food is GST-free under Schedule 2 of the GST Act)
- Treating healthcare services as taxable (most are GST-free)
- Treating exported goods as taxable (exports to non-residents are GST-free when the physical goods leave Australia)
- Treating financial services as taxable (most are input-taxed, not taxable)
The fix: maintain a GST classification map for each client's business, reviewed at onboarding and updated whenever the business adds new product or service categories.
2. Claiming GST Credits Without a Valid Tax Invoice
For GST credits on purchases over $82.50 (GST-inclusive), a valid tax invoice is required before the credit can be claimed. A bank statement or credit card entry is not a valid tax invoice.
Common scenario: a client books a large software subscription or equipment purchase and the bookkeeper codes the GST credit based on the bank transaction, without obtaining the underlying invoice. If the ATO reviews the period and the invoice isn't on file, the credit is disallowed.
3. Incorrect PAYG Withholding Figures
The PAYG withholding reported on the BAS should match the withholding reported through STP for the period. Discrepancies arise when:
- Payroll is processed outside the accounting software and the figures aren't reconciled back
- Employee reimbursements or expense claims are incorrectly included in gross wages
- An off-cycle termination payment is made but not captured in the BAS period
Reconcile the BAS PAYG withholding figure against the STP data for the period before every lodgement.
4. Double-Counting or Missing Income on the BAS
G1 (total sales) should include all supplies made during the period — taxable, GST-free, and input-taxed. Common errors:
- Excluding income received in advance (if the service is fully performed in the period, it's income for that period on an accruals basis)
- Including only deposited income and missing invoiced-but-unpaid amounts (for accrual basis reporters)
- Double-counting income when both the sales system and the bank feed are used without reconciliation
The fix: run a sales reconciliation before completing the BAS — total invoiced vs total reported.
5. Claiming Credits on Private or Dual-Use Purchases
GST credits can only be claimed on purchases used for business purposes. For dual-use items (a mobile phone used 60% for business), only the business proportion is claimable.
Commonly overclaimed: home internet (if only partially business use), mobile phones, utilities (if claimed as business expenses when the business is home-based), and vehicle expenses that include personal travel.
6. Reporting on the Wrong Basis (Cash vs Accruals)
Businesses with turnover under $10 million can choose to report GST on either a cash or accruals basis. Once chosen, the basis must be applied consistently. Mixing the two — reporting income on cash basis but credits on accruals basis, or vice versa — is a significant error.
If a client changed accounting software or bookkeepers and there's ambiguity about which basis is registered with the ATO, check the business's GST registration details via the ATO portal or call the ATO to confirm.
7. Missing Taxable Imports (GST on Imported Services)
Since July 2017, GST applies to imported digital services provided to Australian consumers (the "Netflix tax"). For business clients who import software, digital tools, or online services from overseas suppliers, they may need to report GST under the reverse charge mechanism.
Most small businesses don't pay GST on imports and are unaware of the obligation. If a client uses significant overseas software subscriptions (SaaS tools, cloud services) and the overseas supplier is not registered for Australian GST, the client may have an obligation to self-assess and report.
8. Incorrectly Claiming Fuel Tax Credits
Eligible businesses — those operating vehicles on private roads (farms, mines) or using fuel in stationary plant — can claim fuel tax credits. The rate varies by fuel type and use.
Common errors: claiming fuel tax credits for on-road travel by standard vehicles (not eligible), using an outdated credit rate (the rate changes regularly), or claiming credits without adequate fuel records.
9. Late Lodgement as a Habit
The ATO charges a failure-to-lodge penalty of one penalty unit per 28-day period (or part thereof) that a BAS is outstanding, up to a maximum of five penalty units. For large PAYG withholders, higher penalties apply.
Beyond the penalty: a pattern of late lodgement triggers ATO risk flags and can result in a business being moved to a monthly lodgement cycle, increasing the compliance burden.
Build the lodgement schedule into your practice management system with internal deadlines 5–7 days before the ATO due date. This buffer accommodates any last-minute client queries without creating a lodgement risk.
10. Not Amending Incorrect Prior BAS Lodgements
When a BAS error is discovered — a missed credit, an incorrectly coded supply, a PAYG figure that didn't reconcile — many bookkeepers simply adjust in the next period rather than lodging a formal amendment. This is problematic because:
- The ATO expects errors to be corrected via amendment, not adjusted in the current period
- Unadjusted prior errors can complicate an ATO review of the current period
- Systematic errors that are adjusted rather than amended may not surface until an ATO audit
For net errors of $10,000 or less, corrections can be made in the next BAS without a formal amendment. For larger errors, an amendment must be lodged. The decision threshold applies to the net GST amount, not the individual transaction value.
Building a Pre-Lodgement Review Checklist
The most effective way to catch these errors consistently is a pre-lodgement review checklist that runs before every BAS is submitted:
- G1 reconciled to sales records for the period
- 1A (GST collected) cross-checked against coded transactions
- 1B (GST credits) reviewed for valid invoices and correct proportions
- W1/W2 reconciled against STP for the period
- Prior period errors identified and treatment confirmed (amendment or current-period adjustment)
- Lodgement date confirmed as within the ATO deadline
A pre-lodgement checklist takes five minutes and catches the errors that take hours to unwind after the fact.