BAS and GST Explained: The Plain-English Guide for Australian Small Business (2026)

GST (Goods and Services Tax) is a broad-based tax of 10% applied to most goods, services and other items sold or consumed in Australia. If your business is registered for GST, you add 10% to the price of your taxable sales, collect that GST from your customers, and pass it on to the Australian Taxation Office (ATO).

The maths trips a lot of people up. When a price already includes GST, the GST portion is one-eleventh (1/11) of the total, not 10% of it. So a $110 GST-inclusive invoice contains $10 of GST and $100 for the goods. If you are adding GST to a $100 net price, you add $10 to make $110.

The important upside is that GST is not a cost to most registered businesses. You collect GST on what you sell, you pay GST on what you buy, and the BAS is simply where those two figures meet. You send the ATO the difference (or get a refund if you paid more GST than you collected).

Not everything attracts GST. Some sales are GST-free and some are input-taxed, which changes the rules. We cover those next.

You are required to register for GST once your GST turnover reaches $75,000 or more in a 12-month period. For not-for-profit organisations the threshold is higher, at $150,000.

GST turnover is your gross business income (excluding GST), not your profit. The ATO uses two tests. You must register if your turnover for the current month plus the previous 11 months is $75,000 or more, or if your projected turnover for the current month plus the next 11 months is likely to reach $75,000 or more.

Once you cross the threshold, you have 21 days to register. You need an Australian Business Number (ABN) first, and you can apply for both at the same time. If you are required to register but do not, you may have to pay the GST you should have collected on past sales (even if you never charged it to customers), plus penalties and interest.

Some businesses must register regardless of turnover. If you provide taxi, ride-sourcing or limousine travel for passengers (for example, driving for a rideshare platform), you must register for GST from your first dollar of income.

You can also register voluntarily if your turnover is under $75,000. The trade-off is that you must then charge GST, lodge activity statements and stay registered for at least 12 months, but you can also claim back GST on your business purchases. The benefit depends on your situation, so it is worth a quick chat with an accountant or BAS agent before you opt in.

Not every sale includes GST. There are two categories where you do not add the 10%, and the difference between them matters for your BAS.

GST-free sales: you do not charge GST, but you can still claim GST credits on the things you buy to make those sales. Common GST-free items include:

• Most basic foods (fruit, vegetables, meat, bread, plain milk)
• Many medical, health and care products and services
• Some education courses and materials
• Exports of goods (generally if exported within 60 days) and many services supplied to customers outside Australia

Input-taxed sales: you do not charge GST, and you cannot claim GST credits on the related purchases. The two most common are:

• Financial supplies (such as lending money or providing credit for a fee)
• Selling or renting out residential premises (residential rent and most residential property sales)

If you are unsure which category a particular sale falls into, this is a classic area where a registered tax agent or BAS agent earns their fee, because getting it wrong can mean either over-charging customers or under-reporting to the ATO.

A Business Activity Statement (BAS) is the form you lodge with the ATO to report and pay your tax obligations. If you are registered for GST, you lodge a BAS. The ATO typically issues it (or makes it available online) around two weeks before the end of your reporting period.

GST is the core of most small business BAS, but a single statement can also bundle together several other obligations, so you make one report and one payment instead of many. Depending on your registrations, your BAS may include:

• GST on sales and GST credits on purchases
• PAYG withholding (tax you have withheld from employees' wages, reported at labels W1 to W5)
• PAYG instalments (pre-payments towards your own income tax)
• Fuel tax credits (reported at label 7D)
• Wine equalisation tax, luxury car tax or FBT instalments, if they apply to you

You only report the items you are actually registered or liable for. A typical sole trader with no employees might just report GST, while a business with staff will also report PAYG withholding on the same form.

After you lodge, you either pay the ATO the net amount owing or receive a refund if your GST credits and other amounts exceed what you owe.

If your GST turnover is less than $10 million, you automatically use Simpler BAS, the ATO's reduced reporting method. It is the default for small business and cuts the GST reporting down to three figures.

Under Simpler BAS you report only:

• G1 Total sales
• 1A GST on sales
• 1B GST on purchases

You do not need to complete a GST calculation worksheet or break sales down into export sales, GST-free sales and capital versus non-capital purchases. That detail is only required under the full reporting method, which applies once your GST turnover reaches $10 million or more (where you also report labels G2, G3, G10 and G11).

Simpler BAS only changes how much detail you report to the ATO. It does not change your underlying records, so you still need to keep accurate tax invoices and bookkeeping to back up the figures.

How often you report GST depends mainly on turnover. Most small businesses report quarterly. If your GST turnover is $20 million or more you must report monthly and lodge online. If your turnover is under $20 million you can choose to report monthly if you prefer (some businesses do, to smooth out cash flow or because they are usually in a refund position).

The standard quarterly BAS due dates are:

• Quarter 1 (July to September): due 28 October
• Quarter 2 (October to December): due 28 February (this already includes a one-month extension)
• Quarter 3 (January to March): due 28 April
• Quarter 4 (April to June): due 28 July

If you lodge your quarterly BAS online, or through a registered tax or BAS agent, you generally get an extra two weeks beyond the standard date. The exception is Quarter 2, which already carries the built-in February extension, so no further two weeks applies there. If a due date falls on a weekend or public holiday, you have until the next business day.

Monthly BAS is due on the 21st day of the following month (for example, a July monthly BAS is due 21 August). Some businesses voluntarily registered with turnover under $75,000 can report and pay GST annually instead. The exact dates on your own statement always override the general dates above, so check the date printed on your BAS or in ATO Online services.

You also choose an accounting method for GST, and it affects which BAS a transaction lands in. Businesses with an aggregated turnover under $10 million can choose either method. At $10 million or more, you must use the accruals (non-cash) method.

On a cash basis, you account for GST in the period you actually receive or make payment. This often suits smaller businesses because you do not have to pay GST to the ATO on an invoice until your customer has paid you, which helps cash flow.

On an accruals (non-cash) basis, you account for GST in the earlier of when you issue or receive an invoice, or when payment is made. This can mean paying GST to the ATO before your customer has paid you, but it gives a more complete picture if you invoice heavily on terms.

Choosing Simpler BAS does not lock your accounting method. Businesses under $10 million can use Simpler BAS reporting whether they account on a cash or accruals basis. Which method suits you depends on how you invoice and get paid, so it is worth confirming with your accountant before you set it in your bookkeeping software.

Lodging or paying your BAS late can trigger two separate costs: a failure to lodge (FTL) penalty and a general interest charge (GIC).

The FTL penalty is calculated at one penalty unit for every 28 days (or part of) that the statement is overdue, up to a maximum of five penalty units. A penalty unit is $330 from 7 November 2024 (and is indexed again from 1 July 2026, so confirm the current figure). For a small business, that means up to 5 x $330 = $1,650. The penalty is doubled for medium entities (turnover between $1 million and $20 million) and multiplied by five for large entities ($20 million or more).

Separately, the GIC applies to any amount you do not pay by the due date and compounds daily. The rate is reviewed each quarter. For the April to June 2026 quarter the GIC annual rate was 10.96%. Importantly, from income years starting on or after 1 July 2025, GIC is no longer tax-deductible, which makes paying on time more valuable than ever.

The ATO generally does not penalise isolated, one-off late lodgments and usually warns you first. It also will not normally issue an FTL penalty where the late statement results in a refund or a nil amount. If you genuinely cannot lodge or pay on time, contact the ATO early. You may be able to arrange a payment plan, and penalties and interest can sometimes be remitted if you have a reasonable explanation.

You can prepare and lodge your own BAS for free through ATO Online services for business, and many sole traders and small businesses do exactly that, often straight out of their accounting software (which can lodge directly to the ATO).

If you want help, the key rule is that only a registered tax agent or BAS agent can legally charge a fee to prepare and lodge your BAS on your behalf. Agents must be registered with the Tax Practitioners Board (TPB), and they are bound by a professional code of conduct.

Before you hand over your numbers, you can and should check that the person or firm is genuinely registered. The TPB keeps a free public register where you can search by name to confirm someone's registration and see any conditions or disciplinary history.

A registered BAS agent can also generally access the same lodgment extensions available to tax agents, and a good one will keep you out of the GST-free versus input-taxed traps and the late-lodgment penalties described above. Whether that is worth the fee depends on the complexity of your business and how confident you are with the bookkeeping.