Whether you lodge a Business Activity Statement (BAS) or an annual income tax return depends primarily on whether you are registered for GST, employ staff, or withhold tax from payments – your obligations are determined by your business structure and registrations, not by choice. Understanding which lodgement applies to your situation helps you stay compliant with the Australian Taxation Office (ATO) and avoid penalties.
BAS vs Annual Return: When You Need Each – 2026 AU Guide
Sorting out your tax lodgement obligations is one of the first things a good accountant will help you organise. But before you book that appointment, understanding the difference between a Business Activity Statement and an annual income tax return can save you time, confusion, and potentially money. This guide walks through both obligations in plain English, tailored for Australians in 2026.
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What Is a Business Activity Statement (BAS)?
A Business Activity Statement is a form lodged with the ATO that reports and pays several tax obligations at once, most commonly Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, PAYG instalments, and fringe benefits tax instalments. It is a periodic lodgement, meaning you submit it monthly, quarterly, or annually depending on your circumstances.
The ATO explains that you must register for GST – and therefore lodge a BAS – if your business has a (GST turnover that meets the relevant threshold). Businesses below that threshold may choose to register voluntarily, which also triggers BAS obligations. Taxi and ride-sourcing operators must register for GST regardless of turnover.
The BAS is not just about GST. If you have employees and withhold tax from their wages, that PAYG withholding must also be reported on your BAS. Similarly, if you pay PAYG instalments towards your expected income tax liability, those are reported and paid via the BAS cycle. Think of it as a single hub for several of your ongoing tax obligations throughout the year.
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What Is an Annual Income Tax Return?
An annual income tax return is what most Australians – individuals, companies, trusts, partnerships, and self-managed superannuation funds (SMSFs) – lodge once per financial year to report their taxable income and calculate any tax payable or refund owing. It covers the full income year running from 1 July to 30 June.
Individuals who earn above the tax-free threshold are generally required to lodge, and most businesses lodge a return specific to their structure – a company tax return, a trust tax return, and so on. The ATO provides detailed guidance on who needs to lodge each year.
The annual return captures all income sources: salary, business profits, rental income, capital gains, and more. Deductions, offsets, and credits are all reconciled here. If you have been paying PAYG instalments throughout the year via the BAS system, those payments are credited against the final tax assessed in your annual return, so you are not taxed twice.
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When You Need Both
Many Australian business owners find themselves lodging both a BAS and an annual income tax return, and this is entirely normal. The two lodgements serve different purposes and are not mutually exclusive.
If you run a registered sole trader business with GST registration and staff, you will typically lodge a BAS quarterly (or monthly, if your turnover is higher) throughout the year, and then lodge an individual income tax return at year end. A company in the same position lodges a company tax return as well as its periodic BAS obligations.
The BAS handles the real-time, ongoing tax flows during the year. The annual return reconciles your overall income tax position once the financial year is closed. Your accountant will use your BAS lodgements as source data when preparing your annual return, so keeping your BAS records accurate and up to date matters a great deal.
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When You Only Need an Annual Return
Not every taxpayer needs to lodge a BAS. If you are an individual employed under a standard employment arrangement – meaning your employer handles all the PAYG withholding and remits it to the ATO on your behalf – you simply lodge an individual income tax return each year.
Likewise, a small business owner who is not registered for GST, has no employees, and is not paying PAYG instalments may only need to lodge an annual return to report their business income and deductions. Once their turnover grows to the point where GST registration becomes mandatory (or they take on staff), the BAS obligation kicks in.
Investors, retirees, and people with passive income streams who are not running a business typically have no BAS obligation at all. Their tax affairs are captured entirely in the annual return.
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Lodgement Deadlines and Penalties
Deadlines matter. The ATO sets specific due dates for each BAS period, and late lodgement or payment can result in failure-to-lodge penalties. The ATO's BAS lodgement and payment dates are published on their website and vary depending on whether you lodge yourself or through a registered tax agent.
A key benefit of engaging a registered tax agent or BAS agent is that they often have extended lodgement deadlines, which can provide meaningful breathing room at busy times of year. You can confirm a practitioner's registration status on the Tax Practitioners Board public register before engaging them.
For the annual income tax return, individuals lodging through a tax agent generally receive an extended deadline compared with self-lodgers. Check the ATO's current year lodgement programme for the exact dates that apply to your situation.
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Choosing the Right Professional Help
Navigating BAS and annual return obligations is manageable with the right support. A registered BAS agent can prepare and lodge your activity statements, while a registered tax agent can handle both BAS obligations and annual returns. Not all bookkeepers are registered BAS agents, so always verify credentials.
If your affairs are complex – multiple income streams, a company or trust structure, an SMSF, or significant capital gains events -- engaging a qualified accountant who is also a registered tax agent will give you the most comprehensive coverage. You can find professionals suited to your location and needs in our best accountants in Sydney directory, and learn more about how we assess professionals on our methodology page. For a detailed breakdown of what professional services typically cost, see our cost guide.
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Frequently Asked Questions
Q: Can a sole trader be exempt from lodging a BAS? A: Yes. If a sole trader is not registered for GST, has no employees, and is not required to pay PAYG instalments, they generally have no BAS obligation. They would still need to lodge an annual individual income tax return reporting their business income. Q: What happens if I register for GST voluntarily – do I have to lodge a BAS forever? A: Once registered, you must lodge BAS forms for each active period until you cancel your GST registration with the ATO. You can apply to cancel registration if your circumstances change and you no longer meet the mandatory registration criteria, subject to ATO approval. Q: Are BAS lodgements and the annual return sent to the ATO separately? A: Yes. They are separate lodgements submitted at different times. Your BAS is lodged during the year at monthly or quarterly intervals. Your annual income tax return is lodged after the financial year ends on 30 June. Payments made through the BAS system are reconciled against your final annual tax assessment. Q: What is the difference between a BAS agent and a tax agent? A: Under the Tax Agent Services Act, a BAS agent is authorised to provide BAS services, which includes GST, PAYG withholding, and related obligations. A registered tax agent has broader authorisation that includes income tax return preparation and lodgement. Both must be registered with the Tax Practitioners Board. You can check registrations at the TPB public register.---
Sources
- Australian Taxation Office – GST registration - Australian Taxation Office – Do you need to lodge a tax return? - Australian Taxation Office – Due dates for activity statements - Tax Practitioners Board – Public register - Australian Taxation Office – Home - ASIC – Company and SMSF obligations
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Information in this article is general only and not tax or financial advice. Verify the details with the linked sources or an appropriately qualified Australian professional before relying on them.
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