A Business Activity Statement (BAS) is a form you submit to the ATO to report and pay several tax obligations at once. For most small businesses, the BAS is the single most important recurring tax obligation — it covers GST, PAYG withholding (tax deducted from employee wages), and PAYG instalments (prepayments of your own income tax liability).
What a BAS Covers
Depending on your registrations and reporting requirements, your BAS may include:
| Component | Who it applies to |
|---|---|
| GST — net GST collected minus input tax credits | All businesses registered for GST |
| PAYG withholding — tax withheld from employee wages | Businesses with employees |
| PAYG instalments — prepayments of your own income tax | Sole traders, investors, and others in the instalment system |
| FBT instalments — quarterly prepayments of fringe benefits tax | Businesses that pay FBT annually |
| Fuel tax credits | Businesses using fuel in certain activities (farming, mining, heavy vehicles) |
| Wine equalisation tax (WET) | Wine producers and wholesalers |
| Luxury car tax (LCT) | Car dealers selling vehicles above the LCT threshold |
For most small businesses without employees, the BAS only covers GST. For businesses with employees, PAYG withholding is also reported.
BAS Labels — Key Sections
The ATO uses a label system to identify different parts of the BAS. The most common labels are:
| Label | What it means |
|---|---|
| G1 | Total sales (GST-inclusive turnover) |
| G2 | Export sales (GST-free) |
| G3 | Other GST-free sales |
| G10 | Capital purchases |
| G11 | Non-capital purchases |
| 1A | GST on sales (your output tax) |
| 1B | GST on purchases (your input tax credits) |
| W1 | Total wages and other payments (before tax) |
| W2 | Total PAYG withheld from employees |
| T1 | PAYG instalment income |
| T4 | PAYG instalment amount |
The net GST position is 1A minus 1B. If 1A > 1B, you owe the ATO. If 1B > 1A (you claimed more credits than GST collected), the ATO owes you a refund.
BAS Reporting Frequency
| Annual GST turnover | Default lodgement frequency |
|---|---|
| $20 million or more | Monthly (mandatory) |
| Under $20 million | Quarterly (default) |
| Under $75,000 (with approval) | Annually |
Most sole traders and small businesses lodge quarterly. If you have high, consistent GST turnover and want better cash flow visibility, you can opt into monthly lodgement voluntarily.
Annual BAS Lodgement
If your GST turnover is under $75,000 and you meet the eligibility criteria, you can lodge a single annual BAS. However, even annual lodgers may need to pay GST instalments quarterly throughout the year, with the final BAS reconciling the actual position.
The GST Calculation
The net GST amount you report and pay (or receive as a refund) is:
$$\text{Net GST} = \text{GST on sales (1A)} - \text{GST on purchases (1B)}$$
Example:
- Sales for the quarter: $110,000 (incl. GST) → GST collected = $10,000
- Business purchases for the quarter: $33,000 (incl. GST) → Input tax credits = $3,000
- Net GST payable = $10,000 − $3,000 = $7,000
You would pay $7,000 to the ATO for that quarter.
PAYG Withholding on the BAS
If you have employees, you deduct tax from their wages each pay period. The total amount withheld across the quarter (or month) is reported at label W2 on your BAS. You are not paying new tax here — you are remitting tax you already deducted from employees’ wages.
PAYG withholding is reported separately from GST. It is not offset against your GST credit.
PAYG Instalments
If you are a sole trader or investor whose last tax return showed more than $1,000 in tax payable (and income over a threshold), the ATO will put you into the PAYG instalment system. Rather than paying a large tax bill at tax time, you pre-pay quarterly instalments. See PAYG Instalments for Self-Employed for details.
Record-Keeping for BAS
To complete your BAS accurately, you need:
- Sales records (invoices issued)
- Purchase records (invoices received, bank statements)
- Payroll records (if applicable)
- Accounting software totals or a manual cashbook
Records must be kept for 5 years from when you lodged the relevant BAS.
Related Articles
- How to Lodge a BAS
- BAS Deadlines and Penalties
- GST Australia Explained
- PAYG Instalments for Self-Employed
- GST and Business Tax hub
Frequently Asked Questions
Do I have to lodge a BAS if I had no sales in the quarter? Yes. If you are registered for GST, you must lodge a BAS for every period even if you had zero activity — it is called a “nil BAS.” You can lodge nil BAS quickly through the ATO Business Portal or your tax agent.
Can I get a refund on my BAS? Yes. If your input tax credits (GST on purchases) exceed the GST you collected on sales, the ATO will refund the difference. This commonly happens for businesses with high capital expenditure or export-heavy businesses.
What if I make a mistake on a BAS? You can amend a previous BAS through the ATO Business Portal or by asking your tax agent to lodge an amendment. The ATO allows amendments within a four-year period in most cases. Voluntary amendments generally reduce or eliminate penalties.
This article provides general tax information. For advice tailored to your situation, speak with a registered tax agent or BAS agent. Find one through the Tax Practitioners Board register.