A Beginner's Guide to Business Activity Statements (BAS) in Australia

 If you’ve just started a business, BAS is probably one of those terms you’ve heard a few times without really knowing what it involves.

In simple terms, a Business Activity Statement (BAS) is how you report certain tax obligations to the ATO during the year. Depending on your business, that could include GST, PAYG withholding and PAYG instalments.

The first BAS can feel a bit overwhelming because there are different labels, figures and tax categories to deal with. But once your bookkeeping is up to date and you know what each section is asking for, it becomes much more straightforward.

What Is a Business Activity Statement?

A BAS is a way to report certain business taxes to the ATO throughout the year.

For most small businesses, GST is the main part.

If you’re registered for GST, you’ll usually charge GST on taxable sales. At the same time, you may be able to claim back the GST you’ve paid on eligible business expenses.

Say you run a landscaping business. You charge customers GST for your work, but you’re also paying GST when you buy materials, tools and other supplies. Your BAS looks at both sides and determines whether you have GST to pay or are entitled to a credit.

It’s also worth knowing that BAS and your annual tax return are not the same thing. BAS deals with certain tax obligations during the year, while your tax return looks at your overall taxable income for the financial year.

Who Needs to Lodge a BAS?

Having an ABN doesn’t automatically mean you need to lodge a BAS.

The main reason most businesses lodge one is that they’re registered for GST.

GST registration is usually required when your turnover reaches $75,000. For not-for-profit organisations, the threshold is $150,000.

There are some exceptions. Taxi, limousine and ride-sourcing businesses may need to register for GST regardless of how much they earn.

You can also choose to register for GST even if you’re below the normal threshold.

Depending on how your business operates, your BAS might also include PAYG withholding or PAYG instalments.

What Do You Report on a BAS?

What you need to report depends on your business, but these are the areas most business owners encounter.

GST

This is where you report things like your sales, the GST you collected and the GST credits you’re claiming on eligible purchases.

If you’re using the ATO’s simpler BAS reporting method, you’ll commonly see:

• G1 – Total sales

• 1A – GST on sales

• 1B – GST on purchases

This is where good bookkeeping makes a big difference. If everything has been entered and coded properly during the quarter, preparing the BAS is much easier.

PAYG Withholding

If you employ staff and withhold tax from their wages, you may need to report those amounts on your BAS.

The important thing to remember is that this is money you’ve withheld from payments made to employees or certain other payees.

PAYG Instalments

PAYG instalments are different.

These are payments made towards the tax you’re expected to owe on your own business or investment income.

So, in simple terms: PAYG withholding is tax you withhold from someone else’s payment, while PAYG instalments go towards your own expected tax bill.

How Often Do You Need to Lodge a BAS?

Not every business lodges BAS on the same schedule.

You may lodge monthly, quarterly or annually, depending on your circumstances.

If you lodge monthly, your BAS is usually due on the 21st of the following month. Businesses with GST turnover of $20 million or more are required to report GST monthly.

Many small businesses lodge quarterly. The usual due dates are:

• July to September - 28 October

• October to December - 28 February

• January to March - 28 April

• April to June - 28 July

Your actual due date may differ, particularly if a registered agent is lodging it for you.

If you’ve voluntarily registered for GST and your turnover is still below the registration threshold, you may also be able to report annually.

Cash vs Non-Cash GST Reporting

This part sounds more complicated than it really is.

With the cash method, GST is generally reported when money actually changes hands. So you report GST when a customer pays you, and you generally claim GST credits when you pay for a purchase.

With the non-cash method, the timing is usually based on when an invoice is issued or received, or when payment happens, whichever comes first.

Not every business can use the cash method, so it’s worth checking which method applies to you rather than assuming.

What Should You Have Ready Before Preparing Your BAS?

The easiest BAS is the one you’ve been preparing for all quarter without realising it.

If your bookkeeping is current, there shouldn’t be a mad rush at the end of the reporting period.

You’ll usually need:

• Sales and income records

• Expense and purchase records

• Tax invoices

• Bank transactions

• GST information

• Payroll records

• PAYG withholding details

• PAYG instalment information

• Up-to-date accounting records

Before lodging, it’s also worth reconciling your bank accounts and checking that transactions have been given the right GST treatment.

Most business records must be retained for 5 years, although some have longer retention requirements.

Common BAS Mistakes to Avoid

Most BAS mistakes aren’t caused by complicated tax law. They happen because something has been missed or coded incorrectly in the bookkeeping.

A few common ones are:

• Claiming GST when the supplier didn’t charge GST

• Using the wrong GST code

• Leaving sales out

• Claiming private expenses through the business

• Lodging before the accounts are reconciled

• Mixing up PAYG withholding and PAYG instalments

If you realise something is wrong after you’ve already lodged, don’t just leave it and hope it sorts itself out.

Some mistakes can be fixed on a later BAS. Others may mean you need to revise the BAS you already lodged. What you need to do depends on the type and size of the error.

Can You Lodge BAS Yourself?

Yes, you can.

Many business owners lodge their own BAS through the ATO’s online services, especially when the business is small and the bookkeeping is fairly simple.

But once you add employees, more complicated GST transactions, overdue BAS, messy bookkeeping or past mistakes, it can become harder to know whether the numbers are right.

That’s usually where getting a registered tax or BAS agent involved can save a lot of time and avoid problems later.

Make BAS Easier by Staying Organised

The biggest mistake is leaving everything until the BAS deadline.

If your bookkeeping is kept up to date during the month or quarter, preparing BAS becomes far less stressful. Keep your invoices, reconcile your bank accounts and make sure transactions are being treated correctly for GST as you go.

That way, when BAS time comes around, you’re checking the numbers rather than trying to rebuild months of records.

It’s also worth noting that from 1 July 2026, falling behind costs more: the failure-to-lodge penalty is now $364 per 28-day period overdue, and late payment interest charges are no longer tax-deductible. 

Need Help With Your BAS?

If BAS is taking longer than it should, or you’re not completely sure the figures are right, it may be worth getting someone to look it over.

At Clear Tax, we help Australian businesses with BAS, GST, bookkeeping and their broader tax obligations.

Whether it’s your first BAS, you’re a beginner, or you simply want to understand the process better, our step-by-step guide on how to lodge BAS online can walk you through it from start to finish.

Don't Guess Your ABN Tax; Here's How It's Actually Calculated

If you’ve ever wondered what percentage of tax you pay on an ABN, you’re not alone. One of the biggest misconceptions among Australian solo traders is that having an ABN entitles them to a fixed tax rate. The truth is, there isn’t a single ABN tax percentage. Your tax depends on how much taxable income you earn after claiming eligible business deductions.

There is No Fixed ABN Tax Rate

An Australian Business Number (ABN) is simply an identifier for your business. It doesn’t determine how much tax you pay. Instead, your income is taxed according to Australia’s individual income tax rates if you’re operating as a sole trader.​

This means the answer to what percentage of tax do I pay on an ABN depends entirely on your annual taxable income.

How Your ABN Tax Is Calculated

For sole traders, ABN income is added to other personal income and taxed at standard individual tax rates.

Those rates apply progressively. Not all income is taxed at a single rate. Each portion is taxed at the rate that applies to that bracket.

For the 2026-27 financial year, Australian resident individual tax rates are broadly:

• $0 - $18,200: tax-free

• $18,201 - $45,000: 15%

• $45,001 - $135,000: 30%

• $135,001 - $190,000: 37%

• Over $190,000: 45%

On top of this sits the Medicare levy, generally 2%. Medicare levy

ABN income may feel like “business money”, but it is still personal income for tax purposes unless operating through a company or trust.

Why Business Expenses Matter

Many new business owners overestimate the tax they'll pay because they forget about deductions. Claiming legitimate business expenses reduces your taxable income, which can lower your overall tax bill.

Keeping accurate records throughout the financial year also makes tax time much easier and helps ensure you don't miss valuable deductions.

Don't Forget Other Tax Obligations

Depending on your business, you may also need to consider:

• GST registration if your annual turnover reaches the required threshold.

• PAYG instalments if required by the Australian Taxation Office.

• Superannuation contributions if you employ staff.

These obligations are separate from your income tax but are important parts of managing an ABN.

Want a deeper understanding?

Read our blog posts for a deeper dive.

• How Much Tax Do ABN Holders Actually Pay?

How much ABN holders pay? Explained with  practical example.

• Is ABN Income Taxed Differently From Salary?

What makes ABN income tax different from salary

• Do ABN Holders Pay Tax Under the Tax-Free Threshold?

When do ABN holders pay tax under the tax-free threshold?

Final Thoughts

So, what percentage of tax do I pay on an ABN? The simple answer is: there isn't one fixed percentage. Your tax is based on your taxable income after deductions and the Australian income tax rates that apply to your earnings.

Understanding how your ABN tax is calculated allows you to budget more accurately, avoid unexpected tax bills, and make informed financial decisions for your business.

Property Tax Mistakes Investors Make (And How to Avoid Them in Australia)

Buying an investment property can be an exciting way to build long-term wealth. Rental income, potential property value growth, and tax deductions can all improve your overall return. However, tax mistakes can quietly reduce your profits or even lead to problems with the Australian Taxation Office (ATO).

Many of these mistakes are surprisingly common, especially among first-time investors. The good news is that most of them are completely avoidable once you understand the basics.

Here’s a look at some of the most common property tax mistakes investors make in Australia and how you can avoid them.

Common Property Tax Mistakes at a Glance

Common Mistake	Potential Consequence	Better Approach
Not declaring rental income	ATO review, penalties, or extra tax	Report all rental income
Claiming private expenses	Deduction denied	Keep personal and investment expenses separate
Confusing repairs with improvements	Incorrect tax claim	Know whether the expense is a repair or an improvement
Poor record keeping	Missed deductions and CGT issues	Keep receipts, invoices, and property records
Forgetting depreciation	Paying more tax than necessary	Get a depreciation schedule if applicable
Ignoring Capital Gains Tax (CGT)	Higher tax when selling	Keep records of purchase, improvements, and sale costs

​1. Claiming Expenses That Aren't Actually Deductible

One of the biggest mistakes property investors make is assuming every expense can be claimed immediately.

Some costs may be deductible straight away, while others may need to be claimed over time or form part of your property's cost base for Capital Gains Tax (CGT) purposes.

Examples of expenses that often confuse include:

• Replacing an entire kitchen

• Installing new flooring throughout the property

• Private utility bills

• Travel that combines personal holidays with inspecting the property

Understanding the difference between deductible expenses and capital expenses can help you avoid claiming something incorrectly.

Real example

Before renting out her new investment property, Sarah spends $18,000 on a brand-new kitchen. She treats it as a repair and claims the whole amount as an immediate deduction.

Later, she learns that replacing the entire kitchen is generally considered a capital improvement rather than a repair, meaning it isn't usually claimed as an immediate deduction.

​2. Forgetting to Declare Rental Income

Many investors think that rental income refers only to the weekly rent paid by tenants. In reality, there can be several different types of income that may need to be declared.

This can include:

• Weekly rental payments

• Airbnb or other short-term rental income.

• Insurance payouts relating to rental income.

• Bond money retained to cover tenant damage.

The ATO receives information from a variety of sources, so failing to report rental income can result in additional tax, interest, or penalties later.

Real example

During the summer, Mark earns extra money by renting out his holiday apartment on Airbnb. He thinks the income doesn't need to be reported on his tax return because Airbnb processes the bookings and payments. Later, he finds out it still generally needs to be declared.

3. Missing Legitimate Tax Deductions

While some investors claim too much, others make the opposite mistake by forgetting deductions they're entitled to claim.

Common deductions may include:

• Loan interest

• Property management fees

• Council rates

• Landlord insurance

• Advertising for tenants

• Gardening and maintenance

• Pest control

• Accountant fees

• Depreciation

Missing legitimate deductions could mean paying more tax than necessary.

Keeping records throughout the year makes it much easier to identify every eligible expense when it's time to prepare your return.

4. Poor Record Keeping

Good records don’t just make tax time easier; they can also support your claims if the ATO ever asks questions.

It’s a good idea to keep records of:

• Loan statements

• Receipts

• Tax invoices

• Rental statements

• Settlement documents

• Improvement costs

These records can also become extremely valuable years later when calculating Capital Gains Tax after selling the property.

Real example

Emma spends a few years renovating her investment property but doesn't keep all the receipts and invoices. When she later sells the property, she finds it difficult to determine the cost base because some records are missing.

5. Confusing Repairs With Capital Improvements

Many investors use the terms "repair" and "improvement" interchangeably, but they don't always receive the same tax treatment.

Generally speaking:

• A repair restores something to its original condition.

• A capital improvement upgrades or improves the property beyond its previous condition.

For example:

Replacing a few broken roof tiles is generally considered a repair.

Replacing the entire roof with a new upgraded structure is generally considered a capital improvement.

Understanding the difference can help ensure expenses are reported correctly.

6. Ignoring Capital Gains Tax (CGT)

Many property investors don't think much about Capital Gains Tax (CGT) until they're ready to sell. By then, details like what they originally paid for the property, renovation costs, selling expenses, and how long they've owned it all play a part in working out the tax.

Keeping receipts and records from the day you buy the property can save you a lot of time and stress when it's eventually time to sell.

7. Assuming Every Property Is Taxed the Same

Not every investment property is treated the same for tax purposes.

The tax rules aren't the same for every investment property. They can change depending on how the property is used. For example, it might be:

• A long-term rental

• A holiday home

• Still under construction

• Vacant land

• Used partly for your own personal use

Before claiming deductions, it's worth checking how the rules apply to your situation. A property that's rented out all year may be treated differently from one that's used as a holiday home or kept vacant for part of the year.

8. Waiting Until Tax Time

Many investors don't think about tax until it's time to lodge their return. By then, receipts may be missing, and important expenses can easily be forgotten. Keeping your records organised throughout the year, tracking any improvements you make, and speaking with an accountant before major renovations or selling the property can help you avoid costly mistakes.

A little planning during the year can make tax time much simpler.

Don't Assume the ATO Won't Notice

Property transactions leave plenty of records.

Rental income, property sales, and information from financial institutions and other organisations can all assist the ATO in reviewing tax returns. Assuming an incorrect claim or undeclared income will go unnoticed can become a costly mistake.

Keeping accurate records and understanding your obligations is usually much easier than correcting errors after you've lodged your return.

Final Thoughts

Owning an investment property comes with tax benefits, but it's also easy to make costly mistakes. Keeping good records, reporting all your rental income, and knowing what you can and can't claim can help you avoid problems at tax time.

If you're unsure about your investment property's tax position, Clear Tax can help. Our experienced accountants can review your return, ensure it complies with ATO requirements, and help you claim the deductions you're entitled to with confidence.

GST Mistakes That Cost Small Businesses Thousands (And How to Avoid Them)

Getting GST right is one of those jobs that seems straightforward until a small mistake turns into an unexpected tax bill or an ATO review. Many Australian small businesses make GST errors without realising it. In most cases, they’re not trying to do the wrong thing. 

They simply misunderstand the rules or rely on incomplete bookkeeping.

The good news is that most GST mistakes are avoidable. By understanding the common pitfalls and keeping accurate records, you can save time, avoid penalties, and keep your Business Activity Statements (BAS) accurate.

GST Mistakes That Cost Small Businesses (And How to Avoid Them)

If your business is registered for GST, You’re responsible for collecting GST on taxable sales, claiming GST credits correctly, and reporting everything accurately through your BAS.

Even small errors can lead to incorrect GST refunds, extra tax payable, interest charges, or the need to amend a previous BAS lodgement. Here are some of the most common GST mistakes Australian small businesses make, and how to avoid them.

1. Claiming GST on Purchases That Don’t Include GST

One of the most common mistakes is assuming every business expense includes GST.

In reality, some expenses don’t have GST at all, so there’s no GST credit to claim. These commonly include:

• Employee wages

• Most bank fees and financial services

• Some government fees and charges (excluding GST)

• Certain insurance products

For example, if your business pays monthly bank account fees, those fees are generally input-taxed and don’t include GST. Claiming a GST credit on them will result in an incorrect BAS.

Before claiming GST, check the supplier’s tax invoice. If no GST has been charged, you generally can’t claim a GST credit.

2. Forgetting to Charge GST on Taxable Sales 

Some businesses accidentally issue invoices without GST, particularly when they're new to business or have recently become GST registered.

This can happen because:

• Accounting software isn't set up correctly.

• GST settings are applied incorrectly to products or services.

• Staff accidentally create GST-free invoices for taxable sales.

The problem is that you're still responsible for paying the GST to the ATO, even if you didn't charge your customer correctly. That means the GST may need to come out of your own pocket.

Review your invoices regularly and make sure your accounting software applies the correct GST treatment to every taxable sale.

3. Claiming GST on Personal Expenses 

Another common mistake is mixing personal and business expenses.

GST credits are generally only available for purchases related to running your business. Personal spending doesn't qualify, even if it was paid using the business bank account.

Examples include:

• Family groceries

• Personal holidays

• Private vehicle expenses

• Household purchases with no business purpose

If an expense is partly for business and partly personal, you can generally only claim the business portion of the GST.

Keeping separate business and personal accounts makes this much easier.

4. Poor Record Keeping 

Good bookkeeping is about more than staying organised; it also helps you avoid costly GST mistakes. Many businesses run into trouble because they lose receipts, don't keep tax invoices, enter transactions incorrectly, or leave their bookkeeping until it's time to lodge their BAS.

Without proper records, it can be difficult to prove you're entitled to claim GST credits.

To claim GST credits, you generally need a valid tax invoice for purchases of more than A $82.50 (GST inclusive). So, keeping digital copies of your invoices and updating your records regularly can save you time, reduce stress, and help prevent compliance issues.

5. Using the Wrong GST Classification 

Not every sale is treated the same for GST purposes.

Depending on the type of goods or services you provide, a transaction may be:

• Taxable

• GST-free

• Input taxed

Businesses operating in industries such as healthcare, education, food, or property often encounter more complex GST rules.

Using the wrong GST code in your accounting software can affect every BAS you lodge, especially if the same mistake is repeated over several months.

If you're unsure how a particular sale should be treated, it's worth checking before lodging your BAS.

6. Registering for GST at the Wrong Time 

Some businesses delay GST registration because they assume they can wait until the end of the financial year.

However, if your GST turnover is $75,000 or more (or $150,000 for non-profit organisations), you generally need to register for GST. 

Waiting too long can create problems: if you were required to register but delayed, you may still be liable to pay GST on taxable sales made from the date registration should have applied. 

On the other hand, some businesses voluntarily register before reaching the threshold to claim GST credits on business purchases. While this can be beneficial, it also means meeting ongoing GST reporting obligations.

7. BAS Lodgement Mistakes 

Preparing a BAS isn't simply a matter of copying figures from your accounting software. Common mistakes include lodging after the due date, entering incorrect sales figures, forgetting GST adjustments, estimating numbers instead of using actual records, or carrying forward errors from previous BAS lodgements.

These mistakes can have costly consequences. Late or incorrect BAS lodgements can result in interest charges, penalties, or requests for additional information from the ATO. 

Taking the time to review your BAS before lodging can help you avoid unnecessary corrections and compliance issues.

Example 

Imagine Lucy, a café owner in Melbourne, prepared their quarterly BAS using bookkeeping records they had updated themselves.

During the quarter, she purchased a new coffee machine, food supplies, paid staff wages, and incurred monthly bank fees. When completing the BAS, she accidentally claimed GST credits on both the employee wages and bank fees.

Before lodging the BAS, their accountant reviewed the figures and noticed the mistake. The incorrect GST claims were removed, the BAS was corrected, and the business avoided receiving a larger GST refund than it was entitled to.

While it was a simple error, correcting it before lodgement reduced the risk of future amendments or ATO compliance issues.

Simple Ways to Avoid GST Mistakes 

Most GST errors stem from poor processes rather than complicated tax rules.

A few good habits can make a big difference:

• Keep your bookkeeping up to date.

• Store tax invoices digitally.

• Review GST coding regularly.

• Reconcile your accounts before preparing your BAS.

• Separate business and personal spending.

• Ask for professional advice when you're unsure.

Spending a little time checking your records throughout the year is much easier than fixing mistakes after you've lodged your BAS.

Final Thoughts 

GST is part of everyday business in Australia, but that doesn't mean it's always straightforward. Small mistakes, such as claiming GST where none exists, charging the wrong GST on sales, or lodging an inaccurate BAS, can quickly become expensive if they're left uncorrected.

The good news is that these mistakes are usually preventable with accurate bookkeeping, regular reviews, and a clear understanding of the GST rules that apply to your business.

If you're unsure whether your GST reporting is correct, or you'd like help with BAS preparation, bookkeeping, or GST compliance, Clear Tax is here to help. 

Our experienced team works with Australian small businesses to keep their records accurate, meet their tax obligations, and avoid costly GST mistakes, so you can spend more time focusing on running your business.