BAS and GST Explained: A Plain-English Guide for Small Business
GST and the Business Activity Statement are the two tax obligations most likely to trip up a new Australian business owner — not because they're complicated, but because nobody explains them without the jargon. This guide covers what GST actually is, when you have to register, how to fill in your BAS without second-guessing every label, and the mistakes that cost small businesses real money.
What GST actually is
GST (goods and services tax) is a 10% tax added to the price of most goods and services sold in Australia. Here's the mental shift that makes everything else click: the GST you collect is not your money. You're collecting it on behalf of the ATO. When a customer pays you $110 for a $100 job, $10 of that belongs to the tax office, and your BAS is how you hand it over.
Not everything attracts GST. Some sales are GST-free, including most basic food (bread, milk, fresh produce), most health and medical services, most education courses, and exports. That distinction matters later, because one of the most common BAS mistakes is claiming GST credits on things that never had GST in the price to begin with.
The $75,000 registration threshold
You must register for GST once your GST turnover reaches $75,000, or $150,000 if you're a not-for-profit (as at August 2026). Two things about that figure catch people out:
- It's turnover, not profit. GST turnover is your gross business income (excluding GST itself), not what's left after expenses. A business turning over $80,000 with $70,000 of costs still has to register.
- It's a rolling 12-month test, not a financial-year one. You've hit the threshold if your turnover for the current month plus the previous 11 months is $75,000 or more, or if you reasonably expect the current month plus the next 11 months to reach it. If you land a big contract in month three, you may need to register straight away.
Once you cross the threshold (either test), you have 21 days to register. Miss that window and the ATO can make you pay GST on sales from the date you should have registered — even though you never collected it from your customers. That's 1/11th of your revenue gone.
One exception worth knowing: if you drive a taxi or do rideshare work (Uber, DiDi and the like), you must register for GST from your first dollar of fares. The $75,000 threshold doesn't apply.
Should you register voluntarily?
If you're under the threshold, registration is optional. Registering lets you claim back the GST on your business purchases and can make you look more established to commercial clients. The trade-off: you must add 10% to your prices (or absorb it), and you're locked into lodging activity statements. If your customers are mostly other GST-registered businesses, registering early usually makes sense — they claim the GST back anyway. If you sell to the public on tight margins, think harder.
How to register
You'll need an ABN first — if you're still deciding how to set up, sort your structure out before you register (see our guide to choosing between sole trader, company and trust). Then you can register for GST:
- through ATO online services,
- via the Business Registration Service on business.gov.au (you can do ABN and GST in one go),
- by phone to the ATO, or
- through your accountant, tax agent or BAS agent.
Registration is free and usually instant.
What a BAS actually is
A Business Activity Statement is the form you lodge — usually quarterly — to report and pay the tax you've collected or owe. Despite the name, it's not just about GST. Depending on your situation, one BAS can cover:
- GST you've collected on sales, minus the GST credits you're claiming on purchases
- PAYG withholding — the tax you've taken out of employees' wages
- PAYG instalments — pre-payments towards your own income tax bill
That's the part nobody tells you up front: the BAS is a multi-tax form. If you have staff, or the ATO has put you on income tax instalments, those amounts land on the same statement as your GST.
Once you're registered for GST, you must lodge every BAS by its due date — even if it's nil. No sales, no purchases, doesn't matter. Lodge the zeroes.
Lodgement cycles and due dates
How often you lodge depends mostly on turnover (figures as at August 2026):
| Cycle | Who it applies to | Due date |
|---|---|---|
| Quarterly | Most small businesses (turnover under $20 million) | 28th of the month after quarter end |
| Monthly | Turnover of $20 million or more, or by choice | 21st of the following month |
| Annually | Voluntarily registered and under the $75,000 threshold | With your income tax return (or 28 February if you don't lodge one) |
The quarterly dates to put in your calendar:
| Quarter | Period | Due date |
|---|---|---|
| Q1 | July – September | 28 October |
| Q2 | October – December | 28 February |
| Q3 | January – March | 28 April |
| Q4 | April – June | 28 July |
Notice Q2 gets an extra month — a small mercy for the Christmas period. If a due date falls on a weekend or public holiday, you get until the next business day. Lodging through a registered tax or BAS agent generally buys you extra time on most quarters too — check the current concession dates on ato.gov.au or ask your agent.
What goes in each label, in plain English
If your turnover is under $10 million (as at August 2026), you'll use Simpler BAS, which cuts the GST section down to three labels:
| Label | Official name | What it actually means |
|---|---|---|
| G1 | Total sales | Everything you invoiced or were paid this period, including GST |
| 1A | GST on sales | The GST you collected from customers — roughly 1/11th of your taxable sales |
| 1B | GST on purchases | The GST you paid on business expenses that you're claiming back |
Your bill (or refund) is simply 1A minus 1B. Collected more than you paid? You owe the difference. Paid more than you collected — say you bought a ute this quarter? The ATO refunds you.
If you have employees, you'll also complete:
| Label | What it means |
|---|---|
| W1 | Total gross wages you paid this period |
| W2 | The tax you withheld from those wages — this gets paid to the ATO with your BAS |
And if you're in the PAYG instalment system, an instalment amount (label 5A) is added on top — a pre-payment towards your income tax that's credited back when you lodge your tax return.
Good accounting software fills most of this in automatically from your bookkeeping and lodges straight to the ATO — if you're still doing it from a spreadsheet, our accounting software comparison will help you pick a tool that does the heavy lifting.
GST credits: the money coming back
Every time you buy something for the business from a GST-registered supplier — stock, fuel, software subscriptions, tools, accountant's fees — the price usually includes 10% GST. As a registered business you claim that back at label 1B. Rules that matter:
- The purchase must be for business use. Part-private purchases (like a phone plan) can only be claimed for the business portion.
- For purchases over $82.50 including GST (as at August 2026), you need a valid tax invoice to claim. Under that, an EFTPOS receipt or bank record will do.
- The supplier must actually be registered for GST. No GST in the price means nothing to claim.
Common mistakes to avoid
- Claiming GST on GST-free items. Bank fees, most insurance stamp duty components, basic food, overseas software subscriptions from unregistered suppliers, employee wages, council rates — no GST in them, nothing to claim. Coding these correctly in your software matters.
- Claiming the full GST on part-private expenses. The ute you also use on weekends isn't 100% claimable.
- Missing due dates. Late lodgement attracts penalties, and the ATO charges interest on late payments. Set reminders for the four quarterly dates or get an agent to lodge for you.
- Spending the GST. That 1/11th sitting in your account isn't yours. Move it to a separate account each week so BAS time doesn't become a cash crisis — more on this in our cash flow management guide.
- Lodging nothing because you earned nothing. Nil BAS statements still have to be lodged.
- Guessing instead of reconciling. Your BAS figures should come from reconciled books, not a rough estimate you true-up later.
Record-keeping requirements
The ATO requires you to keep the records behind your BAS for five years from when you prepared them or completed the transaction, whichever is later. That means tax invoices, receipts, bank statements, wage records and the working papers behind each BAS. Records must be complete, unaltered and in English (or easily converted), and digital copies are fine — a scanned receipt in your accounting software satisfies the requirement, which is handy given thermal-paper receipts fade to blank long before five years is up.
Key takeaways
- GST is 10% you collect for the ATO — treat it as their money from day one and set it aside.
- Register within 21 days of your rolling 12-month turnover hitting $75,000 ($150,000 for not-for-profits, as at August 2026); rideshare and taxi drivers must register regardless of turnover.
- Most small businesses lodge a quarterly BAS due 28 October, 28 February, 28 April and 28 July.
- Your GST position is simply 1A (GST collected) minus 1B (GST credits) — and PAYG withholding and instalments ride along on the same form.
- Don't claim credits on GST-free items, and keep tax invoices for anything over $82.50.
- Keep all supporting records for five years — digital copies count.
Where to get help
- ATO — Business activity statements — due dates, labels and lodgement options straight from the source.
- business.gov.au — Register for GST — registration in one place, alongside your ABN.
- ASIC — if you run a company, your ASIC obligations sit alongside your ATO ones.
- A registered tax or BAS agent — for most small businesses, the lodgement extensions and avoided mistakes pay for the fee. Find one through the Tax Practitioners Board register.
General information only. This guide doesn't take your personal or business circumstances into account and isn't financial, legal or tax advice. Rates and thresholds change — confirm current figures with ato.gov.au or your accountant before acting.