The December quarter Business Activity Statement covers the period 1 October to 31 December and carries a lodgement and payment deadline of 28 February — one of the longer turnaround windows in the BAS calendar. That extra time is welcome, because December is also the quarter most likely to contain messy transactions: Christmas parties, end-of-year bonuses, stock write-offs, and a flurry of supplier invoices landed before the 31st. Getting your reconciliation process right before you open the BAS in the ATO's Online Services for Agents portal will save hours of back-and-forth with clients.
Key Dates and Who They Apply To
Most quarterly GST reporters have until 28 February to lodge and pay the December quarter BAS. Monthly reporters have a 21-day window after month end for each of October, November, and December. Annual GST reporters who have opted in to quarterly PAYG instalments still need to action the T7 instalment amount by 28 February.
If your client is on a Lodgement Obligation Deferral, confirm that the deferral covers the December quarter — the ATO does not automatically roll deferrals forward, and a missed deferral request can trigger a failure-to-lodge penalty.
GST Reconciliation: Matching the BAS to the P&L
Before entering a single figure in the BAS, reconcile GST collected (G1 through G9) and GST paid (G10 through G15) against the general ledger. The most reliable method is a three-way check:
- G1 (Total sales) should agree to the revenue line of the income statement, adjusted for any GST-free or input-taxed supplies.
- 1A (GST on sales) should equal 1/11th of taxable sales — run a GST audit report in your accounting software and confirm it matches field 1A to the cent.
- 1B (GST credits) should reconcile to the GST portion of purchase transactions coded as either GST or CAP in your transaction coding system.
Any discrepancy at this stage almost always points to a miscoded transaction — a supply incorrectly coded GST-free, or a private expense that slipped through as a business purchase. In ReconLink, filtering the transaction list by GST code and date range lets you spot outliers quickly before you finalise the BAS.
PAYG Withholding Reconciliation
Employers report PAYG withholding in field W1 (total salary, wages, and other payments) and W2 (amounts withheld). W2 must match the sum of withholding reported in Single Touch Payroll for the same period. If your client uses a payroll platform integrated with STP, pull the YTD STP summary for October through December and confirm the W2 figure agrees.
Common divergences arise when:
- A bonus or termination payment was processed but the tax withheld was not reconciled back to payroll.
- An employee repaid an overpayment — the repayment reduces gross wages but the original withholding may have already been reported.
- A contractor was incorrectly classified as an employee (or vice versa) part-way through the quarter.
Fuel Tax Credits
December is a high-activity quarter for many primary producers, transport operators, and mining businesses that claim fuel tax credits (FTC). The FTC rate for business use of diesel changed on 1 August 2026 — confirm your client is using the rate applicable to the period of acquisition, not a single rate across the whole quarter.
Document the fuel acquisition records: litres purchased, supplier invoices, and business use percentage. The ATO's fuel tax credit calculator is the most defensible approach for mixed-use fleets. Enter the FTC amount in field 7C of the BAS.
December-Specific Traps to Check Before Lodgement
Christmas parties and entertainment. Staff Christmas parties are generally not deductible for income tax and attract no GST credit when the cost per head stays under the $300 minor benefit FBT threshold. If the cost exceeds $300 per employee, FBT applies. Client entertainment is 50% deductible and carries no GST credit — both halves need to be coded correctly. Misclassifying entertainment as a fully deductible business expense is one of the most common errors the ATO finds during GST reviews.
End-of-year stock adjustments. If your client conducted a stocktake and wrote off obsolete or damaged stock, ensure the write-off is coded correctly — the disposal of trading stock is treated as a deemed sale at market value for GST purposes only when the goods are applied to private use. Pure write-offs for damaged or obsolete goods do not trigger a GST liability, but they do affect the trading stock adjustment in the income tax return.
Prepaid expenses. Many businesses pay insurance renewals, subscriptions, and lease payments before 31 December to bring forward deductions. Confirm the GST credit has been claimed in the period the tax invoice was received, not the period the expense relates to.
Director loans and shareholder drawings. These are not expenses and should not be coded in a way that inflates G10 or reduces taxable income. Review any large debit transactions in December against the director loan account before finalising.
Final Checklist Before You Lodge
- Bank accounts reconciled to zero outstanding items as at 31 December.
- GST audit report ties to BAS fields 1A and 1B.
- W2 agrees to STP payroll summary.
- Fuel tax credit rate verified against ATO published rates.
- Entertainment and Christmas party transactions coded consistently (no GST credit claimed).
- Any deferred BAS lodgement arrangements confirmed in writing.
A disciplined December quarter BAS process not only keeps your clients compliant — it sets the books up cleanly for the EOFY work that follows six months later.