How to register for GST and lodge a BAS

Registration is compulsory once your GST turnover meets the registration threshold, and the obligation is prospective as well as retrospective: you must register within a short period of becoming aware that your turnover will exceed the threshold, not after the year ends and you can see that it did. Registering late means you can be liable for GST on sales you invoiced without charging it, which comes straight out of margin.

GST turnover is not the same as profit or even as total income. It is gross business income excluding GST itself, excluding input-taxed sales and excluding sales not connected with Australia. The test looks both at the current month plus the previous eleven, and at the current month plus the next eleven, so a business growing quickly can cross the threshold on the forward test months before the backward one.

Different thresholds apply to non-profit organisations and to taxi and ride-sourcing services, where registration is required from the first dollar regardless of turnover. Ride-share drivers routinely discover this after their first tax year.

Below the threshold, registration is optional and the decision turns on who your customers are. If you sell to GST-registered businesses, registering costs you nothing in practice — they claim back the GST you charge — and lets you claim credits on your own purchases. If you sell to consumers, registering means either raising prices or absorbing the tax out of margin.

Businesses with heavy start-up purchases sometimes register voluntarily to recover GST credits on equipment and fit-out before they have significant sales. That is legitimate, but it commits you to lodging BAS from that point and to charging GST on everything you sell.

Once registered you must stay registered for at least twelve months before you can cancel, and cancelling has consequences of its own — GST adjustments on assets you still hold, for instance. Registering casually 'to look established' is a common and avoidable source of ongoing compliance.

Register through the Business Registration Service alongside your ABN if you are starting out, or through your ATO online services if the business already exists. Registration takes effect from a date you nominate, subject to the rules, and it is worth being precise about that date rather than accepting a default.

Under the cash basis, you account for GST in the period in which you actually receive payment from customers and actually pay suppliers. Under accruals, you account for it in the period in which you issue or receive the invoice, regardless of when money moves.

For a business that gets paid slowly, cash accounting is transformative. It means you never remit GST on an invoice you have not been paid for, and it aligns the BAS liability with the bank balance. For a business that gets paid immediately but pays suppliers on terms — retail, hospitality — accruals can actually be more favourable, because you claim credits on purchases before you pay for them.

Eligibility for cash accounting is capped by turnover, with a higher cap than the registration threshold, and certain entities can use it regardless. Once you exceed the cap you must move to accruals, and that transition creates a one-off period where you effectively account for both — which is a cash flow event businesses seldom plan for.

The choice is made when you register and can generally be changed, but not mid-quarter and not casually. Changing method requires adjustments so that transactions are neither counted twice nor missed, and it is the sort of thing to do at the start of a period with your accountant rather than because a quarter looks awkward.

Your reporting cycle is a separate question from your accounting method. Most small businesses report quarterly. Businesses above a turnover level must report monthly, and some very small businesses can report annually if they are voluntarily registered. Monthly reporting is more work but smooths cash flow and reduces the size of any single payment.

You can also choose to change to monthly reporting voluntarily, and businesses that consistently find the quarterly amount unmanageable often should. Paying a third of the amount three times as often is materially easier than finding the whole amount once a quarter.

Whichever method you use, the practical control is the same: move the GST component out of the operating account when the money arrives. The businesses that never have a BAS problem are almost always the ones doing this, and it costs nothing to set up.

Reconcile your accounts for the period before you start. Bank feeds should match statements, all sales invoices should be entered, and supplier bills should be recorded with the correct GST treatment. A BAS prepared from unreconciled books produces an error that surfaces at the worst possible time, usually during a review.

Check the GST treatment of your sales. Most are taxable. Some are GST-free — basic food, most health and medical services, most education, exports and some childcare — meaning you charge no GST but still claim credits on related purchases. A few are input taxed — residential rent and most financial supplies — meaning you charge no GST and cannot claim credits either. Misclassifying sales is the commonest substantive BAS error.

Check the credits you are claiming. You can claim GST credits on purchases used in your business where GST was actually charged, you have a valid tax invoice for purchases above the low-value threshold, and the purchase is not for making input-taxed supplies or for private use. Where an expense is partly private — a phone, a vehicle — you claim only the business proportion.

Exclude what you cannot claim. There is no GST in wages, superannuation, bank fees, most government charges, motor vehicle registration components, residential rent, or purchases from suppliers who are not registered for GST. Coding a supplier as GST-inclusive when they are not registered is an easy and frequent error — check their ABN status if you are unsure.

Add the other labels that apply to you. PAYG withholding from employee wages, PAYG instalments towards your own income tax, fringe benefits tax instalments, fuel tax credits and wine equalisation tax all appear on the BAS if you are registered for them. PAYG withholding in particular is money held on employees' behalf and is treated seriously if not remitted.

Lodge online through ATO online services, your business portal, compatible accounting software or a registered agent. Lodging through a registered tax or BAS agent generally attracts extended deadlines, which is a real cash flow benefit as well as a compliance one.

Pay by the due date shown on the statement, or lodge on time and arrange a payment plan if you cannot. Keep the confirmation. If you find an error later, correct it — small errors can generally be corrected on a later BAS within limits, and larger ones require a revision.

File the supporting records. You need to be able to substantiate every figure for five years, and the reconstruction cost when you cannot is far higher than the storage cost.

Claiming credits without a valid tax invoice is the most common. Above the low-value threshold you need a document that identifies the supplier, their ABN, the date, a description of what was supplied, the GST amount or a statement that the total includes GST, and for larger amounts the recipient's identity. A bank statement line is not a tax invoice.

Claiming GST on purchases from unregistered suppliers is next. Plenty of small contractors have an ABN but are not registered for GST, and their invoices should not include it. Check the ABN Lookup register if an invoice looks ambiguous, because the liability for claiming a credit that was never charged sits with you.

Private use apportionment is a standing area of ATO attention. Vehicles, phones, internet, home office costs and travel almost always have a private component, and claiming the full credit on them is a straightforward adjustment for a reviewer to make.

Capital purchases and property transactions attract particular scrutiny because the amounts are large. GST on property is genuinely complex — margin scheme, going concern, new residential premises, mixed use — and it is the area where professional advice most clearly pays for itself.

Refund BAS lodgements are checked more often than payable ones, and legitimately so. A business claiming a large refund should expect the ATO to ask for supporting documentation, and should have it ready rather than assembling it under a deadline. Refunds can be held while a check is done.

Consistency matters as much as accuracy. Sales reported on BAS should reconcile to income reported in the income tax return, and to data the ATO receives from payment processors, contractors' taxable payments reports and other sources. Unexplained divergence is one of the strongest triggers for contact.

If you find an error yourself, correct it promptly. Voluntary disclosure generally results in significantly reduced penalties compared with the same error found during a review, and the ATO's stated position is that it treats honest mistakes differently from careless or deliberate ones.

Lodge anyway. This is the single most important thing. Failure to lodge attracts its own penalties, prevents the ATO from working out what you owe, and removes access to payment arrangements. A lodged BAS with an unpaid balance is an ordinary situation; an unlodged BAS is an escalating one.

Ask for a payment plan. Small businesses can often set up a payment arrangement online without speaking to anyone, and larger or longer arrangements can be negotiated by phone. Interest generally accrues, but the arrangement stops enforcement action while you comply with it.

General interest charge applies to unpaid amounts and compounds daily. Remission of interest and penalties is possible where circumstances warrant — illness, natural disaster, a genuine mistake corrected voluntarily — but it is discretionary and it is asked for, not offered.

Understand what falling behind exposes directors to. Unpaid PAYG withholding, GST and superannuation guarantee can become the personal liability of company directors through director penalty notices, and the protections available depend on whether the amounts were reported on time. Reporting on time, even when unable to pay, preserves options that non-reporting destroys.

Get help early rather than at the end. Registered BAS and tax agents can lodge on your behalf and negotiate with the ATO; the ATO's own small business support lines deal with this constantly; and the free Small Business Debt Helpline provides independent financial counselling for businesses in difficulty.

Fix the underlying problem, not just the quarter. If the BAS is unaffordable, the usual causes are pricing that does not cover the true cost of delivery, payment terms that fund customers' working capital out of yours, drawings taken from money that was never available, or an accounting method mismatched to the cash cycle. Each is fixable, and none is fixed by borrowing to pay a BAS.

Finally, if the business is not viable, find that out deliberately rather than by attrition. Insolvent trading has personal consequences for directors, and there are formal restructuring options for small companies that are far better used early than late. Independent advice at that point is not a defeat; it is the last decision that is genuinely yours to make.