Common Mistakes Businesses Make When Lodging BAS—and How to Avoid Them

Most Common BAS Lodgement Mistakes

Business owners frequently encounter several recurring issues when preparing their Business Activity Statements. These errors can range from simple oversights to more complex misunderstandings of tax regulations. Being aware of these common mistakes is the first step toward preventing them.

Incorrect GST Reporting

One of the most frequent errors is incorrectly reporting GST amounts. This includes both over-reporting and under-reporting GST on sales and purchases. Over-reporting leads to higher GST liability than necessary, affecting your cash flow, while under-reporting can result in penalties from the ATO.

Many businesses mistakenly claim GST twice, particularly when dealing with hire purchase or lease agreements for vehicles or equipment. For example, a business owner might claim the entire GST amount when purchasing a vehicle in the first reporting period, then incorrectly record monthly repayments as either GST or capital expenses, resulting in duplicate GST claims.

Poor Record-Keeping Practices

Inadequate record-keeping is at the root of many BAS lodgement errors. Without proper documentation and organisation, it becomes difficult to accurately report your business activities.

Some businesses fail to maintain separate records for business and personal expenses, leading to confusion when preparing BAS. Others don’t properly categorise GST-free and taxable sales, resulting in incorrect GST calculations. Staying organised with your records is essential for accurate reporting.

Timing and Deadline Errors

Missing BAS lodgement due dates is surprisingly common and can lead to substantial penalties. The ATO imposes late lodgement penalties based on the size of your business and how late the submission is, with additional interest charges applied to unpaid tax liabilities.

Another timing-related mistake involves reporting transactions from incorrect periods. This happens when businesses include transactions that fall outside the current BAS reporting period or exclude transactions that should be included.

Classification and Calculation Mistakes

Many businesses struggle with properly classifying transactions. Common errors include:

• Mixing up GST-free and taxable sales (basic food items, certain health services, and exports are generally GST-free)

• Incorrectly classifying expenses that may or may not include GST

• Overlooking capital purchases like equipment or vehicles

• Mixing business and personal expenses

Simple calculation errors can also cause problems. These include transposition errors (flipping digits), mathematical mistakes when adding figures, and incorrectly inputting amounts on the BAS form. 

Effective Strategies to Avoid BAS Errors

Preventing BAS mistakes is much easier than correcting them after submission. Implementing these practical strategies can significantly reduce the risk of errors and make the BAS process more manageable.

Implementing Robust Accounting Systems

Using quality accounting software is one of the most effective ways to reduce BAS errors. Modern accounting programs automatically calculate GST and other taxes, reducing the risk of mathematical errors and helping to correctly categorise transactions for your business activity statements.

While software is helpful, it’s not infallible. Regularly review your account setup to ensure tax codes are correctly assigned. An experienced accountant or registered BAS agent can help configure these codes properly before you start using accounting software.

Regular Reconciliation Practices

Regular reconciliation of your accounts is crucial for accurate BAS reporting. Before lodging your BAS, reconcile your bank statements, sales records, and expense reports to ensure everything matches.

This process helps identify discrepancies early and provides a clearer picture of your financial health. Addressing issues promptly minimises the risk of errors impacting your business activity statements and reduces audit flags.

Calendar Management for BAS Due Dates

Set clear reminders for BAS lodgement due dates and allow plenty of time for preparation. Last-minute rushes often lead to mistakes that could have been avoided with better planning.

Create a BAS preparation schedule that starts well before the due date, giving you time to gather all necessary information, reconcile accounts, and review figures before submission. Whether you lodge your BAS online or by paper form, timely preparation is key.

Working with Tax Professionals

For many businesses, engaging a registered BAS agent or accountant is a worthwhile investment. These professionals stay updated on tax regulations and can spot potential issues that business owners might miss.

Professional assistance is particularly valuable if your business has complex transactions or if you’re new to BAS reporting. They can help set up proper systems from the start, preventing common errors and ensuring your activity statements are accurate.

To avoid confusion or penalties when reporting your business taxes, read our article on Monthly vs. Quarterly BAS Reporting to help you choose the right cycle for your business

What to Do If You’ve Made a BAS Mistake

Even with the best systems in place, mistakes can happen. Knowing how to address errors quickly and correctly is important for maintaining compliance.

Differentiating Between Mistakes and Adjustments

First, determine whether you’re dealing with a mistake or an adjustment. A mistake occurs when something is incorrect at the time of lodgement, such as misclassifying a sale or making a calculation error. An adjustment happens when the original lodgement was correct, but something changed afterward—like a customer returning goods.

Correction Options for BAS Errors

Many GST and fuel tax credit mistakes can be corrected in your next BAS. The appropriate method depends on whether the mistake is a credit error (where the ATO owes you) or a debit error (where you owe the ATO).

For certain mistakes, you can simply make the correction in your next BAS instead of revising a previous one. For larger errors that exceed ATO correction limits, you’ll need to lodge a revision of the original BAS through online services, standard business reporting software, or by contacting the ATO directly.

Maintaining BAS Compliance

Staying on top of your BAS obligations doesn’t have to be stressful. By understanding common mistakes and implementing preventative measures, you can streamline the process and ensure accuracy.

Remember that BAS compliance is not just about avoiding penalties—it’s about maintaining clear visibility of your business finances and tax obligations. Taking a proactive approach to BAS preparation saves time, money, and stress in the long run.