The BAS Mistakes That Attract ATO Attention

Why BAS Errors Are Costing Small Businesses More Than Ever

For many small business owners, lodging a Business Activity Statement (BAS) feels like a routine administrative task.

But what appears to be a minor coding error today can become a costly compliance issue tomorrow.

The Australian Taxation Office (ATO) has identified over-claiming expenses and GST credits as one of its current small-business focus areas. The ATO is also increasingly using data matching and technology to identify inconsistencies in business reporting. [ato.gov.au], [ato.gov.au]

The good news? Most BAS problems are preventable.

Let’s look at some of the most common mistakes and how to avoid them.


The ATO Is Looking Closely at GST Claims

The ATO’s current small-business focus areas specifically include:

  • Over-claiming GST credits
  • Incorrect deductions
  • Omitted income
  • Using business funds for personal purposes
  • Poor record-keeping practices

These are not isolated audit targets. They are areas where the ATO sees recurring errors across thousands of businesses. [ato.gov.au]

In many cases, the issue isn’t fraud.

It’s simply a business making the same bookkeeping mistake over and over.


Mistake 1: Claiming GST Without a Valid Tax Invoice

One of the most common BAS errors is claiming GST credits where the business cannot produce a compliant tax invoice.

Examples include:

  • Lost receipts
  • Screenshots that don’t meet invoice requirements
  • Supplier documentation that doesn’t show GST
  • Bank transactions without supporting paperwork

Why it matters

If the ATO reviews a claim and supporting documentation isn’t available, the GST credit may be denied.

Spring Clean Tip

Review large purchases from the past 12 months and ensure supporting invoices are stored digitally and are easy to locate.


Mistake 2: Mixing Personal and Business Expenses

The ATO identifies the use of business money and assets for personal benefit as a focus area for small businesses. [ato.gov.au]

Examples include:

  • Family holidays partially claimed as business travel
  • Personal subscriptions paid through the business
  • Private motor vehicle expenses
  • Personal shopping charged to company accounts

Why it matters

The issue is often not the transaction itself.

The issue is failing to properly separate and document the business component from the personal component.

Practical Question

Can you clearly explain the business purpose behind every significant expense?

If not, it may be worth reviewing your coding and supporting documentation.


Mistake 3: Incorrect GST Coding

Many GST errors begin inside bookkeeping software.

Examples include:

  • Coding GST-free purchases incorrectly
  • Claiming GST on expenses that do not include GST
  • Incorrect treatment of mixed supplies
  • Claiming GST on private expenses
  • Recording transactions in the wrong GST category

Why it matters

A single coding error may seem insignificant.

A repeated coding error across hundreds of transactions can create a substantial BAS adjustment.


Mistake 4: Not Reporting All Income

The ATO continues to focus on omitted income and increasingly matches information from multiple third-party sources. [ato.gov.au], [ato.gov.au]

Data can be received from:

  • Banks
  • Employers
  • Government agencies
  • Businesses
  • Financial institutions
  • Taxable Payments Annual Reports (TPAR)

The ATO states that it uses this information to identify errors and non-compliance. [ato.gov.au]

Common Examples

  • Cash sales not recorded
  • Online sales omitted
  • Contractor income overlooked
  • Deposits incorrectly treated as non-income

Important Point

What may feel like a small oversight can become highly visible when compared against external data sources.


Mistake 5: Poor Record Keeping

Many businesses don’t discover a record-keeping issue until they’re asked for documentation.

Common examples include:

  • Missing receipts
  • No motor vehicle logbook
  • Missing supplier invoices
  • Poor storage of digital records
  • Unorganised document management systems

Why it matters

Good records make BAS reviews easier, improve bookkeeping accuracy, and significantly reduce stress if questions arise later.


Five BAS Health Check Questions

Before your next BAS lodgement, ask yourself:

✅ Do I have supporting documentation for significant GST claims?

✅ Are personal and business expenses clearly separated?

✅ Have I reviewed GST coding for accuracy?

✅ Am I confident all business income has been recorded?

✅ Can I quickly locate supporting records if requested?

If any answer is “not sure”, it’s worth addressing before lodging.


Conclusion

Most BAS errors aren’t caused by dishonesty.

They’re caused by stretched business owners, inconsistent bookkeeping processes, and systems that haven’t been reviewed for years.

The ATO’s focus on GST credits, omitted income, and personal use of business funds highlights the importance of maintaining accurate records and reviewing your bookkeeping regularly. [ato.gov.au], [ato.gov.au]

A BAS should be more than a compliance obligation.

It should be a regular opportunity to confirm that your business records are accurate, complete, and telling the right story.

Need a BAS Health Check?

If you’re unsure whether your GST coding, record-keeping, or business expense claims are correct, now is an ideal time for a review. A small adjustment today can prevent a much larger problem later.

SBSCH Is Closing — Is Your Business Ready for Payday Super?


🚨 SBSCH Is Closing — Is Your Business Ready for Payday Super?

The ATO’s Small Business Superannuation Clearing House (SBSCH) is shutting down by 1 July 2026, and with it comes a major shift: Payday Super will require employers to pay super at the same time as wages.

If you’re a small business owner, this change means more than just ticking a new box — it’s a fundamental shift in how you manage payroll, cash flow, and compliance.

🔍 Key Dates:

  • 1 Oct 2025: SBSCH closes to new registrations
  • 30 June 2026: Final day of SBSCH operations
  • 1 July 2026: Payday Super begins — super must be paid with wages

💼 What You Need to Do:

  • Review your payroll software (Xero, MYOB, QuickBooks)
  • Explore commercial clearing houses or super fund services
  • Plan for real-time super payments to avoid penalties

👋 Need help navigating the transition?

As a Registered BAS Agent and Bookkeeper, I help small businesses stay compliant and confident through change. At Customised Accounting Matters, we offer tailored support to future-proof your payroll and super processes.

📧 Reach out: cameron@customisedaccounting.com.au


Have you checked out your super fund?

I was chatting with one of my clients recently about their end of month, and as we were discussing payroll and superannuation I asked when was the last time they had reviewed their super fund.   Imagine my surprise when they said that they had never reviewed their super!  Ever.  Even though they felt the financial adviser that they had used had given them poor advice, and set them up with a bad income insurance product that cost them thousands, and they didn’t feel their super was the best it could be.

I am not a financial adviser, but if you need to review your superannuation fund (like I do every year or two), then go to ato.gov.au/yoursuper.  It’s free.  No obligation.  No hidden kickbacks.  Do it.  It could make tens of thousands of dollars difference to your retirement.  

Does it make sense to outsource your payroll?

Everyone knows the importance of accurate payroll. Industry research conducted by Xero and Dynata confirms up to 49% of small businesses have made payroll errors. Small businesses often rely on manual processes, making the likelihood of error much higher.  These errors may include late payments, under and over-payments, and can erode employee morale and trust. We are payroll professionals that are required to keep our knowledge and technical abilities up to date with any changes in legislation, compliance and technology – we know our stuff so you don’t have to! Some of my clients have handed over responsibility for their payroll in order to spend more time on their business, giving them the freedom to concentrate on why they went into business in the first place! Contact Customised Accounting Matters if you need assistance with your payroll function. Making it easy! #payroll #smallbusiness #outsourcing #xero #myob #customisedaccountingmatters

EOFY is coming! Are you ready?

End of Financial Year is nearly upon us.  Now is the perfect time to make sure you will be ready.  Check out this handy list to help get you on track.

If you are worried your records won’t be up to date by tax time, contact me about our Bookkeeping Rescue service.  Let us do the work for you, while you keep running your business.

#smallbusiness #bookkeepingrescue #eofy #bookkeeping #cashflow #basagent #bas

https://business.gov.au/finance/accounting/essential-tasks-at-end-of-financial-year-eofy

Small business grants

Business Victoria have a range of grants available to help out small businesses. Keep an eye on this page, there could be something your business could apply for, such as the Small Business Digital Adaption Program. This program offers financial assistance of $1200 to help business owners take up digital solutions that support their trading model and performance.

#smallbusiness #smallbusinessgrants #businessvictoria #customisedaccountingmatters

https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance

Thinking of hiring more staff? JobMaker credits factsheet.

If you are looking to put on more staff, maybe JobMaker hiring credits can help offset some of financial impact you will incur while the economy is still in limbo.

Check out this handy JobMaker hiring credit fact sheet to see what help is at hand! Its not as complex as you might think.

Contact me if you want to discuss your business plans for the future!

Small business resilience

https://www.xero.com/blog/2020/12/xsbi-november-data-release/

An excellent little article outlining small business resilience since restrictions have started to lift here in Australia, and also New Zealand.

I really love the point on shopping small, shopping local for last minute gift ideas. Supporting small business in your local area has a huge impact on local economies!

#customisedaccountingmatters #smallbusiness #localbusiness #openforbusiness

“Cash is King” has never been more true!

Never has the phrase “cash is king” been more pertinent than when you are starting up your business, or recovering from an extended period of low demand (like right now!).  An explosion of sales and the resulting influx of money can lead to temptations for splurging on something your business has needed for some time: new computers, a new display fridge – you get the drift.  Managing your cash flow effectively is critical during these times, you must make sure you are able to pay your suppliers, and never forget that you have tax obligations, and superannuation to pay.

According to a study by the Australian Small Business and Family Enterprise Ombudsman, just under half of all small businesses indicate that their cash flow has suffered because of late payments from clients, and 92% believe that they would have generated more revenue in previous years if their cash flow was improved.  Creditor management is critically important for all businesses.

Contact Customised Accounting Matters for a free cash flow analysis, and some ideas on how to improve it.  Its never too late to get your cash flow under control.

#cashflow #bookkeeping #smallbusiness #payroll #superannuation #stp