Taking the Guesswork Out of BAS

Lodging a Business Activity Statement (BAS) is a regular obligation for most Australian businesses, but for many, it can still feel uncertain come lodgment time.

Whether it’s questions about GST coding, reconciliation timing or whether the figures in the software actually reflect what happened in the bank, BAS preparation can feel more complicated than it needs to be.

The good news is that with the right processes and habits in place, BAS lodgment can become one of the more straightforward parts of running a business. In this article, we will be diving into some practical strategies that may help improve BAS accuracy and reduce the pressure that can sometimes build around lodgment time.

1. Start With Clean, Reconciled Books

The accuracy of a BAS submission is directly tied to the quality of the bookkeeping records behind it. If bank accounts, credit cards and loan accounts haven’t been reconciled to the end of the reporting period, the figures flowing into the BAS may not reflect the actual financial position of the business. If you are not already doing it, it may be worth looking into reconciling accounts regularly throughout the quarter rather than all at once before the due date as this may help reduce errors and make BAS preparation a much smoother process.

Some areas worth keeping on top of throughout the period include

• bank account and credit card reconciliations
• accounts receivable and payable
• GST account balances
• loan and liability accounts

Leaving reconciliation until the last minute can create time pressure that increases the likelihood of mistakes. So build it into a regular routine and see the difference it makes in taking the stress out of BAS time altogether.

2. Get GST Coding Right From the Start

A common source of BAS errors is incorrect GST coding on transactions. Not every purchase or sale attracts GST. Some items are GST-free, some are input-taxed and others carry the full 10%. Applying the wrong tax code even on a small number of transactions can affect the accuracy of the final BAS figures.

Areas where GST coding errors tend to occur include:

• mixed-use expenses with both GST and GST-free components
• international purchases or subscriptions
• bank fees and financial supplies
• insurance premiums
• government charges and duties

It may be better to review GST codes on transactions regularly, rather than assuming the software has applied them correctly to reduce coding errors before they flow through to the BAS. Uncertain about how a particular transaction should be coded? It’s always best to seek clarification from your bookkeeper or accountant.

3. Understand the Difference Between Cash and Accrual Reporting

BAS can be prepared on either a cash or accrual basis and the method used can affect which transactions are included in each reporting period. Under the cash basis, GST is reported when money is received or paid. While with the accrual basis, GST is reported when an invoice is issued or received regardless of when payment occurs. Using the wrong basis or not understanding which method the business is set up on in its accounting software, can result in timing differences that affect the accuracy of BAS figures. Confirming which accounting basis applies to the business and making sure the software is set up accordingly, may help avoid discrepancies between what is reported and what has actually occurred during the period.

4. Check Payroll and PAYG Figures Before Lodging

For businesses with employees, the BAS includes PAYG withholding, the tax deducted from employee wages and reported to the ATO. Since the introduction of Single Touch Payroll, payroll figures are reported to the ATO in real time with each pay run. This means the ATO already has visibility over what has been deducted throughout the quarter before the BAS is even lodged.

If the figures on the BAS don’t match what has been reported through STP, it can create discrepancies that may require follow-up with the ATO.

Before lodging, it may be worth checking that:

• total wages and tax figures reconcile to STP reports
• superannuation liabilities have been calculated correctly
• any manual payroll adjustments have been recorded accurately
• payroll figures in the accounting software match the payroll system

Taking the time to cross-check these figures before lodgment could help avoid discrepancies and save time later.

5. Hold Valid Tax Invoices Before Claiming GST Credits

To claim a GST credit on a purchase, a valid tax invoice must be held at the time of lodging the BAS.

A valid tax invoice generally needs to include:

• the words “tax invoice”
• the supplier’s name and ABN
• the date the invoice was issued
• a description of the goods or services
• the GST amount or a statement that the total price includes GST

Claiming GST credits without holding a valid tax invoice or holding documents that don’t meet the ATO’s requirements could create issues if the BAS is ever reviewed. Keeping a consistent process for collecting and storing tax invoices throughout the quarter, rather than chasing them at BAS time, may help ensure credits are claimed accurately and supporting documentation is readily available.

6. Review Before You Lodge

One of the simplest strategies for reducing BAS errors is building a review step into the lodgment process. Rather than lodging whatever the accounting software produces, taking time to review the figures before submission may help identify anything that looks unusual or inconsistent.

A pre-lodgment review might include:

• comparing current period figures to prior quarters
• checking that GST collected and GST paid figures seem reasonable relative to income and expenses
• confirming bank balances reconcile to the period end date
• reviewing any large or unusual transactions that may affect the BAS
• checking that all invoices and receipts have been coded and reconciled

If something doesn’t look right, it is generally better to investigate before lodging rather than amending after the fact.

7. Know When and How to Amend a BAS

Even with good processes in place, errors can still occur from time to time. If an error is identified after a BAS has been lodged, (whether it relates to GST, PAYG or another obligation) it is generally possible to correct it by lodging an amendment. In most cases, businesses have four years from the date of lodgment to amend a BAS. The way the amendment is made will depend on how the original BAS was lodged and the nature of the correction. So how can you keep your records accurate and reduce the risk of discrepancies building up over time? One of the simplest steps is identifying and correcting errors promptly, rather than leaving them to accumulate across multiple periods.

Final Thoughts

BAS accuracy doesn’t come from one single action, it tends to come from a combination of good habits, consistent processes and regular attention to the bookkeeping records that sit behind the submission. Reconciling accounts regularly, coding transactions correctly, reviewing figures before lodgment and understanding how to correct errors when they occur may all contribute to a more accurate and less stressful BAS process over time. Every business’ situation is different, and the strategies that work best will depend on the size of the business, the complexity of its transactions and the systems currently in place. Speaking with a bookkeeper or accountant about your specific circumstances may help identify the areas where improvements could make the most difference.

How Carbon Can Help

At Carbon, our Bookkeeping & CFO Services team works with businesses to help keep financial records accurate, reconciled and ready for BAS lodgment. This may include transaction coding, account reconciliations, payroll support, GST review and ongoing bookkeeping that helps businesses stay on top of their reporting obligations throughout the year, not just at lodgment time. If you’d like to understand how better bookkeeping processes could support more accurate BAS submissions for your business, our team would be happy to help.