BAS Mistakes: 10 Common Errors That Attract ATO Attention

For many Australian business owners, lodging a Business Activity Statement (BAS) is simply another item on the compliance checklist. However, recurring BAS mistakes can increase the likelihood of scrutiny from the Australian Taxation Office (ATO), potentially leading to penalties, interest charges, and unnecessary stress. 

The good news is that most BAS errors are preventable. By understanding the common pitfalls and implementing strong bookkeeping processes, you can improve the accuracy of your reporting and keep your business compliant. 

Why BAS Accuracy Matters 

Your BAS reports GST, PAYG withholding, PAYG instalments, and other tax obligations to the ATO. Even small errors can result in underpaid tax, incorrect credits, or inconsistencies between your accounting records and payroll data. 

Many business owners unintentionally make mistakes due to poor record keeping, incorrect GST coding, or relying on outdated information. Regular reviews and professional bookkeeping support can help identify issues before they become costly problems. 

At iKeep Bookkeeping, we regularly help businesses identify and correct BAS issues before lodgement, reducing compliance risks and giving business owners peace of mind."

BAS Mistakes That Can Attract ATO Attention 

1. Incorrect GST Coding 

One of the most common BAS mistakes is applying the wrong GST treatment to income or expenses. 

Examples include: 

• Claiming GST on GST-free purchases 

• Recording GST-free sales as taxable sales 

• Using incorrect codes within Xero 

• Claiming GST where no valid tax invoice exists 

Even small coding errors can accumulate over time and impact multiple BAS periods. 

Action Tip: Review your GST settings regularly and conduct periodic audits of your transaction coding. 

2. Claiming Private Expenses as Business Expenses 

The ATO pays close attention to deductions and GST claims that contain a private component. 

• Common examples include: 

• Personal travel expenses 

• Household purchases 

• Personal vehicle costs incorrectly claimed as business expenses 

• Mixed-use subscriptions 

If a cost is partly private, only the business-related portion should be claimed. 

Action Tip: Keep personal and business spending separate by using dedicated business bank accounts and credit cards.

3. Missing or Incomplete Tax Invoices 

Many businesses claim GST credits without obtaining valid tax invoices. 

To claim GST credits, businesses generally need documentation that meets ATO requirements, including: 

• Supplier details 

• ABN 

• GST amount 

• Description of goods or services 

Missing documentation can result in denied claims during a review. 

Action Tip: Use cloud document storage and receipt capture tools linked to your accounting software. 

4. Payroll and BAS Reporting Don't Match 

The introduction of Single Touch Payroll (STP) has made payroll reporting significantly more transparent. 

When payroll records do not align with BAS figures, it can create compliance concerns. 

Common issues include: 

• Incorrect PAYG withholding amounts 

• Unreported wages 

Action Tip: Reconcile payroll reports against your BAS and STP submissions before lodging. 

For businesses managing employees, iKeep's payroll and Employment Hero support services can help ensure accuracy and compliance. 

5. Excessive GST Refund Claims 

Claiming unusually large GST refunds compared to previous periods can attract additional scrutiny. 

While legitimate refunds occur, particularly after major purchases or business investments, significant variations may prompt the ATO to request supporting documents. 

Action Tip: Maintain clear records for major purchases and ensure invoices are readily available if requested. 

6. Late BAS Lodgements 

Consistently lodging BAS statements late can place your business on the ATO's radar. 

Late lodgements can lead to: 

• Failure-to-lodge penalties 

• General interest charges 

• Increased compliance monitoring 

Many business owners fall behind due to disorganised bookkeeping or a lack of visibility over upcoming deadlines. 

Action Tip: Create a compliance calendar or partner with a professional bookkeeper to stay ahead of lodgement dates. 

7. Large Adjustments Every Quarter 

Frequent corrections and substantial adjustments across BAS periods may indicate underlying bookkeeping problems. 

While adjustments are sometimes necessary, repeated amendments can suggest: 

Poor transaction coding 

Inadequate reconciliations 

Inconsistent record keeping 

Action Tip: Reconcile bank accounts monthly rather than waiting until BAS time. 

8. Cash Sales Not Properly Recorded 

Businesses that receive cash payments face additional record-keeping responsibilities. 

Industries such as trades, hospitality, retail, and personal services often face greater scrutiny regarding cash transactions. 

Problems arise when: 

Cash income is omitted 

Sales are recorded inconsistently 

Deposits do not align with reported income 

Action Tip: Ensure all sales are captured through your accounting system and reconciled against bank deposits. 

9. Poor Record Keeping 

Many compliance issues stem from inadequate record keeping rather than deliberate wrongdoing. 

Missing records can make it difficult to substantiate: 

Income 

Expenses 

GST claims 

PAYG obligations 

Without supporting documentation, businesses may struggle to defend their BAS positions during an ATO review. 

Action Tip: Maintain digital records and keep documents organised throughout the financial year. 

10. DIY BAS Without Regular Reviews 

Accounting software like Xero has made BAS preparation easier than ever. However, technology alone does not eliminate errors. 

Business owners who prepare BAS themselves may overlook: 

GST coding mistakes 

Unreconciled transactions 

Payroll discrepancies 

Compliance changes 

Periodic reviews from a qualified bookkeeper can significantly reduce risk. 

Action Tip: Schedule quarterly bookkeeping health checks before lodging your BAS. 

How to Reduce BAS Errors 

A proactive approach to bookkeeping is the best defence against compliance issues. 

Consider implementing the following: 

• Reconcile bank accounts monthly 

• Keep digital copies of all invoices and receipts 

• Review GST coding regularly 

• Ensure payroll matches BAS figures 

• Monitor cash flow and tax liabilities 

• Stay informed about ATO reporting requirements 

• Seek professional assistance when uncertain 

Businesses that maintain accurate records throughout the year typically spend less time correcting errors and more time focused on growth. 

How iKeep Bookkeeping Can Help 

Managing BAS obligations can be challenging when you're focused on running your business. Whether you're a tradie, consultant, medical practice, or professional services firm, having accurate records is essential for compliance and informed decision-making. 

At iKeep Bookkeeping, we help Australian businesses with: 

• BAS preparation and lodgement 

• Xero setup and support 

• Payroll processing 

• Employment Hero implementation 

• Bank reconciliations 

• GST compliance reviews 

• Cash flow reporting 

• Bookkeeping health checks 

Our goal is to help business owners stay compliant, reduce risk, and gain confidence in their financial records. 

Final Thoughts 

Most BAS mistakes are not intentional. They result from rushed bookkeeping, incomplete records, or a misunderstanding of GST requirements. The good news is that these issues can usually be prevented through good systems, regular reconciliations, and professional support. 

By identifying and addressing these common BAS mistakes before lodgement, you can minimise compliance risks, avoid unnecessary penalties, and keep your business running smoothly. 

Need help with BAS preparation or bookkeeping support? Contact iKeep Bookkeeping today to ensure your records are accurate, compliant, and ready for lodgement.