Monthly vs. Quarterly BAS Reporting: Which Cycle is Right for Your Australian Business in 2025?

Monthly vs. Quarterly BAS Reporting Cycles

Monthly BAS Reporting Obligations

Monthly BAS reporting is mandatory for businesses with an annual GST turnover of $20 million or more. Under this arrangement, businesses must lodge their activity statements by the 21st day of the following month. For example, your July monthly BAS would be due on August 21st.

Quarterly BAS Reporting Obligations

Businesses with a GST turnover less than $20 million typically report on a quarterly basis. The due dates for quarterly activity statements are:

• Quarter 1 (July-September): Due on October 28

• Quarter 2 (October-December): Due on February 28

• Quarter 3 (January-March): Due on April 28

• Quarter 4 (April-June): Due on July 28

These dates may be extended if you lodge through registered BAS agents, who can generally secure an additional four weeks for quarterly statements.

Annual Tax Period Reporting

For smaller businesses voluntarily registered for GST with an annual turnover under $75,000 ($150,000 for non-profits), annual reporting is an option. The due date aligns with your income tax return lodgement date or February 28 following the end of the financial year if you’re not required to lodge a tax return.

Upcoming Changes to Business Activity Statements in 2025

New ATO Requirements for Activity Statements

Starting April 1, 2025, businesses in Australia with a history of late GST payments, incorrect reporting, or failure to lodge activity statements will be required to switch from quarterly to monthly GST reporting. This change is designed to improve compliance and address outstanding GST debts.

Mandatory Compliance Period for Monthly Reporting

If your business is moved to monthly GST reporting under the new Australian Taxation Office (ATO) requirements starting April 1, 2025, you must adhere to the monthly schedule for a minimum of 12 months. After this period, you may request to return to quarterly reporting if your compliance history improves.

This transition is part of the ATO’s initiative to enhance compliance and reduce outstanding GST debts. Monthly reporting aims to promote better cash flow management with smaller, frequent payments while minimizing errors through more regular reconciliation processes. Preparing your business for this change is essential to ensure smooth operations and avoid penalties.

Reasons Behind Changes to BAS Cycles

The Australian Taxation Office (ATO) has introduced these changes to enhance financial management and compliance for businesses. By promoting smaller, more frequent payments, businesses can improve their cash flow and reduce the risk of facing large quarterly tax bills. These measures also encourage better record-keeping practices, which are essential for maintaining accurate financial data. Additionally, the changes aim to strengthen overall compliance with tax obligations, ensuring businesses meet their responsibilities more effectively.

What are the Advantages of Monthly Activity Statements

Improved Cash Flow Management Through Regular Payments

Monthly reporting creates a more consistent cash flow pattern by distributing GST payments across the year rather than facing large quarterly obligations. This regularity can be particularly beneficial for businesses that need to pay GST frequently or those experiencing growth phases.

Enhanced Financial Awareness with Monthly Lodgements

Filing monthly activity statements encourages more frequent engagement with your financial data. This increased visibility into how much GST you owe can help identify trends or issues before they become significant problems.

Reduced Burden of Large Payments

By spreading your obligations across twelve smaller payments rather than four larger ones, monthly reporting can reduce financial strain during payment periods. This approach can also simplify planning for other taxes like wine equalisation tax or fringe benefits tax.

Better Record-Keeping Practices

The discipline required for monthly lodgements often results in more consistent and accurate bookkeeping practices. When you know you’ll need to report monthly, you’re more likely to maintain up-to-date financial records throughout the year.

What are the Benefits of Quarterly BAS Reporting

Reduced Administrative Burden

Quarterly reporting requires only four lodgements per year compared to twelve for monthly reporting. This significantly reduces administrative workload for sole traders or small businesses without dedicated accounting staff.

Lower Compliance Costs

With fewer lodgements to prepare, quarterly reporting can result in lower compliance costs. This can translate into meaningful savings for small businesses that rely on registered tax agents or accountants.

More Time for Financial Planning

The quarterly cycle provides businesses with more time to organize their finances and reconcile accounts before lodging their activity statements. This extended timeframe can lead to fewer errors in reporting.

Simplified Cash Flow Planning

For businesses with stable revenue and predictable GST obligations, quarterly reporting simplifies cash flow planning by reducing the frequency of payment deadlines that need managing.

Factors to Consider When Choosing Your Reporting Cycle

Business Size and Growth Trajectory

Your current turnover and growth projections should influence whether you report monthly or quarterly. If you’re approaching the $20 million threshold, consider switching voluntarily to monthly lodgements in preparation.

Cash Flow Patterns

Analyze your cash flow patterns carefully. Seasonal businesses might benefit from different approaches depending on whether their peak periods align better with monthly or quarterly payment plans.

Administrative Capabilities

Assess whether your team has the capacity to handle frequent lodgements or whether outsourcing services like those offered by registered BAS agents might be necessary.

Compliance History

Given the upcoming changes in April 2025, maintaining a good compliance history is essential. Late lodgements or payments could force your business into mandatory monthly reporting under ATO rules.

Financial Management Practices

Consider how disciplined your business is at setting aside funds for future payments. If saving for larger quarterly bills is challenging, monthly payments might provide a more manageable alternative despite increased administrative requirements.

Industry-Specific Considerations

Seasonal Businesses

Businesses experiencing seasonal fluctuations may find advantages in either cycle depending on their sales patterns during taxable periods.

Cash-Intensive Businesses

Retailers and hospitality operators may benefit from frequent reconciliation when they report monthly due to their high volume of transactions.

Project-Based Businesses

Construction companies, consultancies, and other project-based businesses might find quarterly reporting aligns better with their revenue recognition patterns and project completion timelines.

How ACT Tax Group Can Help

Personalized BAS Strategy

At ACT Tax Group, we can assess your specific business situation and recommend the optimal BAS reporting cycle based on your industry, size, growth plans, and administrative capabilities. Our experienced team understands the nuances of GST compliance and can help you navigate the 2025 changes with confidence.

BAS Lodgement Services

As registered BAS agents, we can handle your BAS preparation and lodgement, regardless of your reporting cycle. Our services include accessing extended lodgement timeframes that aren’t available to self-lodging businesses, giving you more flexibility in your financial planning.

Compliance Monitoring and Advice

We proactively monitor changes in tax regulations and can advise you on how these changes might impact your BAS obligations. With the significant changes coming in 2025, having expert guidance can help ensure your business remains compliant and avoids unnecessary penalties.

Technology Implementation

Our team can help you implement and optimize accounting software solutions that streamline BAS preparation, making either reporting cycle more manageable through automation and improved financial visibility.

Conclusion

Choosing between monthly and quarterly BAS reporting is a significant decision that can impact your business’s administrative workload, cash flow management, and overall tax compliance. With the 2025 changes approaching, now is the ideal time to evaluate your current reporting cycle and determine if adjustments are needed to optimize your business’s financial management.

Remember that while quarterly reporting remains the standard for most businesses with turnover under $20 million, the ATO’s new enforcement measures may require some businesses to transition to monthly reporting based on their compliance history. By understanding the advantages and considerations of each approach, you can make an informed decision that supports your business’s financial health and compliance obligations.

At ACT Tax Group, we’re committed to helping Canberra and South Coast NSW businesses navigate these decisions with expert guidance tailored to your specific circumstances. Contact our team today to discuss your BAS reporting strategy and ensure you’re prepared for the changes ahead in 2025.