• Common BAS errors - Business Portal

    General problems and solutions

    Problems 

    Solutions 

    Including wages and superannuation contributions as purchases at G11 

    You must report wages at W1. You don’t need to report superannuation contributions..

    Lodging blank forms.

    When lodging statements with nothing to report at any label (a nil statement), insert zeros against labels 1a, 1b and 9.

    Lodging printed activity statements

    You must lodge original activity statements with the Australian Taxation Office (ATO)

    Not registering with the ATO for tax obligations reported in your activity statement.

    It is important to ensure that you are correctly registered for all your tax obligations. To register or cancel registration for PAYG withholding, goods and services tax, luxury car tax or wine equalisation tax, contact us on 13 28 66.

    Not notifying us of the accounting method used.

    If you are new to business reporting, notify us on 13 28 66.

    Using the Incorrect accounting method.

    If you are using the cash accounting method and your business turnover is expected to exceed $1 million, you must change to the accrual accounting method and notify us on 13 28 66. We will consider requests for continued use of the cash accounting method. However, approval is dependent on circumstances.

    Not including cash taken from the till to pay for purchases.

    Total sales (G1 on your BAS) should include all cash payments made out of the till for purchases.

    Including dollars and cents.

    Show only whole dollars when completing your activity statement. To avoid processing errors and to allow us to issue any refund quickly, do not use cents, decimal points, commas, symbols or words such as $, nil and n/a.

    Not lodging your activity statement by the due date

    You must lodge your activity statement and pay any amounts owing by the due date. The only time you don’t have to lodge is if you receive an instalment notice (they have the letter N, R, S or T in the top left-hand corner) and pay the pre-printed instalment amount by the due date.

    Missing dates and details Provide a contact name and daytime phone number.

    Being unsure about when to leave boxes blank and when to report a zero in a box

    Generally, leave boxes blank if they do not apply to your business. For example, if you do not have exports to report, leave the box at G2 blank. However, you should write a zero (0) if you are:

    • using GST Option 1 or Option 2, you haven’t traded for a tax period, and have nothing to report – write '0' at G1 and 1A (these boxes must always be completed)
    • using PAYG Option 2 but you don’t have any instalment income -  write '0' at T1 and 5A 
    •  varying your instalment down to 0 for either GST or PAYG -  you must complete the appropriate variation labels and write '0' at 1A for GST or 5A for PAYG.
     

    Signing your activity statement

     Sign your activity statement using your AUSkey as your digital signature and lodge with us by the due date. 

    Needing to lodge an activity statement if you have nothing to report

    Even if you have nothing to report, we must receive your completed activity statement by the due date, unless otherwise directed on the form. If you have nil activity to report, you may be eligible to use our nil lodgment automated phone service. Refer to How to lodge your activity statement for more information.

    Not knowing how to make payments at Australia Post

    Refer to How to pay – Australia Post for more information.

    Lodging your activity statement late

    Penalties now apply automatically for late lodged activity statements at a rate of $170 every 28 days or part thereof (to a maximum of $850). Higher rates will apply to medium or large taxpayers.

    Talking to someone on the phone

    When phoning us, ensure you have your tax file number ready. If you’re phoning on behalf of someone, you must be the authorised contact person.

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    GST problems and solutions

    Problems 

    Solutions 

    Overlooking boxes, such as 1A (GST sales or GST instalment) and 5A (PAYG income tax instalment)

    You must complete 1A if you’re reporting a GST obligation and 5A if you’re reporting a PAYG obligation (even when your instalment amount is zero).

    Not correctly reporting all amounts at G1 

    You must include all payments and other consideration you have received during the quarter for sales you have made in the course of your business. This includes amounts you have shown at:

    • G2 (Export sales)
    • G3 (GST-free)
    • input taxed supplies like interest on investments and rent on residential properties (shown at G4 if you are using the calculation sheet method).
       
     

    Reporting the wrong amounts at G1 

    Do not report the following amounts at G1:

    • inter-entity loans
    • transfers between bank accounts
    • private money
    • other entities’ income (for example, rent for rental property that is in another entity’s name).
       
     
    When you’re offered options for your GST obligation, completing boxes for more than one option  Complete the boxes for one option only.

    Completing G2 (Export sales) incorrectly (for example, treating supplies as exports when the goods are consumed within Australia)

    You should only report the following at G2:

    • the free on board value of exported goods that meet the GST-free export rules
    • payments for the repairs of goods from overseas that are to be exported
    • payments for goods used in the repair of goods from overseas that are to be exported.
       
     

    Incorrectly claiming GST credits on the total price of a car that exceeds the car limit

    To correctly claim, the following applies:

    • The car limit for the 2011–12 financial year is $57,466 (including GST). This limit is reviewed each financial year and may change.
    • The fuel efficient car limit for the 2011–12 financial year is $75,375 (including GST). This limit is reviewed each financial year and may change.
    • If you purchase a car and the price is more than the car limit, you are restricted to making a maximum claim of 1/11th of the limit.
      Refer to GST and motor vehicles for more information.
       
     

    Incorrectly claiming GST credits

     

     You cannot claim:

    • for bank fees and charges, third party insurance and stamp duty
    • for the full amount of a purchase when the goods are to be used for private purposes (even if only partially used for private purposes). You can only claim for the business portion of the expense
    • where the supplier of the goods or services is not registered for GST. You must also hold a valid tax invoice when you make your claim. You must also hold a valid tax invoice for purchases of $82.50 or more (GST inclusive) when you make your claim. 
       
     

    Not recording the sale of business assets.

    The sale price of business assets, that are not input taxed or GST-free are taxable and must be reported at G1 and 1A.

    Not including the sale of a business.

    The following applies:

    • You must report the sale price of a business, including any GST, at G1.
    • If the sale is a GST-free sale of a going concern, you also include this amount at G3.
    • If the sale is taxable, you must report the GST amount at 1A.
       
     

    Not providing your estimated net GST for the year when requesting a variation to your GST instalment amount

    When varying GST instalments, you must provide an estimated annual net GST amount in G22.

    Notifying a variation to your GST or PAYG Instalment after the due date for the instalment to be paid.

    By law, you must notify us of your variations by the date the instalment is due to be paid.

    Claiming GST credits for the full amount of a purchase when the goods are to be used partially or wholly for private purposes

    You can only claim GST credits on the proportion of the expense used for business.

    Being unaware that you are subject to an increasing adjustment at G1 on your previous activity statement for assets disposed of 

    The following applies:

    • You need to account for GST on an asset disposal.
    • If you sell a business asset you will generally need to account for GST and include the price of the asset sold at G1 and the GST payable at 1A on your activity statement.
    • When completing your tax return you need to ensure that the GST exclusive amount of the asset is included in business income. All income amounts included on the return should be exclusive of GST. Including the GST inclusive amount of the asset will overstate your business income and you will pay additional income tax.
       
     

    Claiming GST credits where the contractor or supplier is not registered or required to be registered for GST.

    You cannot claim GST credits where the contractor or supplier of the goods or services is not registered or required to be registered for GST as no GST is included in the price.

    Changing the legal structure of your business entity and continuing to lodge activity statements under the ABN of the old entity.

    If you change the legal structure of the entity used to carry on your business, you cannot continue lodging your activity statements under the same ABN. You need to apply for a new ABN and register the new entity for GST if that entity is required to be registered for GST, or chooses to register for GST. Examples of changes in legal structure include:

    • changing from a sole trader to a partnership, trust or company, or vice-versa
    • reconstituting a partnership.
     

    Not explaining your variations or providing a variation code 

    When you vary a GST or PAYG instalment amount, you must also say why you made the variation at label G24 (for GST) or label T4 (for PAYG). The reason for varying codes are:

    • 21 Change in investments
    • 22 Current business structure not continuing
    • 23 Significant change in trading conditions
    • 24 Internal business restructures
    • 25 Change in legislation or product mix
    • 26 Financial market changes
    • 27 Use of income tax losses.  
     
    Claiming full GST credits on the purchase of real property (or deposit) at the time of entering into a standard land contract  If you hold a tax invoice, you claim the GST credit for the deposit or full payment of a creditable purchase of land under a completed standard land contract in the activity statement for the tax period in which settlement occurs. This applies whether or not you account for GST on a cash basis.
     Showing total sales at G1 but leaving 1A or G3 blank If you have selected GST option 1 or 2 and your total sales amount at G1 is more than zero, you must show an amount for GST on sales at 1A and other GST  Free sales at G3. If you have nothing to report at 1A and/or G3, show zero at these labels.
     Showing no reason code if varying your instalment

     If you vary your PAYG instalment amount or rate, or your GST amount, you must show one of the following reason codes at label T4 (for PAYG instalments) or label G24 (for GST) on your activity statement:

    • 21 Change in investments (PAYG only)
    • 22 Current business structure not continuing (GST and PAYG)
    • 23 Significant change in trading conditions (GST and PAYG)
    • 24 Internal business restructures (GST and PAYG)
    • 25 Change in legislation (GST and PAYG)
    • 26 Financial market changes (GST and PAYG)
    • 27 Use of income tax losses (PAYG only)
    • 33 Entering or exiting a consolidated group – only head companies should use this code (PAYG only).
       
     
    Claiming GST credits without a tax invoice  You must have a valid tax invoice to GST credits.
    When accounting for GST on a cash basis, claiming GST credits at the commencement of a hire purchase or lease contract  GST credits may only be claimed at the time a repayment is made for a hire purchase or lease contract, when accounting for GST on a cash basis.
     Claiming GST credits for the full amount of a purchase, even when the goods or services are used partially or wholly for private purposes  GST credits may only be claimed for the business portion of the expense.
     Including private expenses when claiming GST credits and deductions on business tax returns  Do not include private expenses on your activity statements or tax returns. This means if you have one bank account for both your business and private purposes, you need to separate the amounts.
    Including wages and superannuation contributions as non-capital purchases (G11)  Do not report wages and superannuation contributions in the GST section of the activity statement. Instead, report wages at W1. You do not need to report superannuation contributions.

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     PAYG withholding problems and solutions

    Problems 

    Solutions 

    When reporting PAYG tax withheld the amount at W5 (total of amounts withheld), incorrectly including the amount at W1 (total salary, wages and other payments)

    If you’re required to report PAYG tax withheld, only add amounts at

    • W2 (amount withheld from total salary, wages and other payments).
    • W3 (other amounts withheld).
    • W4 (amount withheld where no ABN quoted) to calculate W5 (total of amounts withheld).
     

    When you’re offered options for your PAYG obligation, completing boxes for more than one option

    Complete the boxes for one option only.

    Not recording the amount of PAYG withholding at label 4 in the summary

    Label 4 in the summary of the activity statement should always equal the total of the amounts at labels.

    Completing label 4, or one of the W labels, even though you’re not registered for PAYG withholding

    If you pay salary and wages and you’re not registered for PAYG withholding, you can register using the portal by referring to ‘Business registration details’:

    • Select the Registrations radio button.
    • Select the Activity Statement radio button  from the Registrations summary page.
    • Select the Tax Type summary radio button.
    • Select Add tax type - Income tax withholding. 
    • Alternatively, you can phone 13 28 66 or order and complete an Add a new business account form.
     

    Reporting total salary, wages and other payments (W1), but not reporting amounts withheld from these payments (W2)

    Amounts withheld from salary, wages and other payments must be reported at W2 (unless you are a Large PAYG remitter).

    Not reporting amounts withheld from payments when an ABN has not been quoted (W4)

    If an ABN has not been quoted, you must report amounts withheld from payments at label W4.

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    PAYG instalments problems and solutions

    Problems 

    Solutions 

    Overlooking boxes such as 1A (GST sales or GST instalment) and 5A (PAYG income tax instalment), which means we need to contact you

    You must complete 1A if you’re reporting a GST obligation and 5A if you’re reporting a PAYG obligation (even when your instalment amount is zero)

    Incorrect recording of instalment income at T1 

    You must include all your earnings in your instalment income. This includes amounts that are paid by direct credit to your bank account and all cash (even if it has not been banked or was used to pay expenses). You must also account for your non-cash transactions (for example, those resulting from bartering) in your instalment income.

    Not providing your estimated tax for the year when requesting a variation to your PAYG instalment amount

    If you use Option 1 and vary your PAYG instalment for the quarter, ensure you complete T8 and T9. We use your estimated tax at T8 to work out your instalments for the remaining quarters of the income year.

    Having a PAYG instalment obligation but not calculating the amount at 5A correctly

    Your PAYG instalment amount at 5A must equal either:

    • T1 x T2 (PAYG instalment income) x (PAYG instalment rate)
    • T1 x T3  (PAYG instalment income) x (varied PAYG instalment rate)
    • T7 (Pre printed instalment amount)
    • T9  (Varied instalment amount)
     

    Not explaining your variations or providing a variation code

    when you vary a GST or PAYG instalment amount, you must also say why you made the variation at label G24 (for GST) or label T4 (for PAYG). The reason for varying codes are

    • 21 Change in investments
    • 22 Current business structure not continuing
    • 23 Significant change in trading conditions
    • 24 Internal business restructures
    • 25 Change in legislation or product mix
    • 26 Financial market changes
    • 27 Use of income tax losses.
     

    The PAYG tax withheld amount at 4 not equalling the sum of amounts at W2, W3 and W4 

    Calculate the PAYG tax withheld amount at 4 by adding the amounts at W2 + W3 + W4.

    Notifying a variation to your GST or PAYG Instalment after the due date for the instalment to be paid

    By law, you must notify us of your variations by the date the instalment is due to be paid.

    Not showing any PAYG instalment income at label T1 

    If you report your PAYG instalment amount using the income x rate method (option 2) and your income for the period is zero, write ‘0’ at label T1.

    Not including interest and dividend income at T1 

    If you calculate your own PAYG instalment on your activity statement (that is, you use option 2, instalment income x instalment rate) then include at label T1 any interest received or credited to your bank account, and dividends paid or re-invested on your behalf (don’t include franking credits). Our publications You and your shares and PAYG Instalments – How to complete your activity statement contain more detailed information. For more information, refer to Activity statements or phone 13 28 66.

    Indicating that you want to vary your PAYG instalment amount but not completing all the relevant PAYG variation labels

    Complete all relevant PAYG variation labels, for example, if varying the:

    • T7 amount, complete labels T8, T9, T4 and 5A 
    • T2 rate, complete labels T1, T3, T11, T4 and 5A.
     

    Reporting net income at Label T1 

    You must report total gross income (excluding GST) at label T1. Refer to PAYG instalments – how to complete your activity statement.

    Not reporting instalment income at label T1 but reporting total sales at label G 

    Generally, the presence of sales for GST purposes means that there must be at least that amount of instalment income reported at T1. Instalment income reported at T1 also includes other income such as dividends and interest.

    Not reporting instalment income at label T1 when T1 is zero

    T1 must be completed if it is zero when the Commissioner rate (T2) is used for reporting instalment income

    Adjusting the T1 figure to reflect a change in expected tax liability

    Commissioner rate (T2) should be varied using T3 to reflect a change in expected tax liability.

    Individuals lodging a quarterly PAYG I activity statement not including their income from partnerships and trusts as instalment income at label T1 on a quarterly basis

    Individuals who lodge a quarterly PAYG I activity statement must include their share of income from partnerships and trusts as instalment income at label T1 each quarter.

    Calculating label 5A incorrectly

    Label 5A must equal either:

    • T1 x T2 
    • T11 (T1 x T3) – when varying the PAYG instalment rate
    • T7 – when using the PAYG instalment amount
    • T9 – when varying the PAYG instalment amount.
     

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    FBT problems and solutions

    Problems 

    Solutions 

    Lodging activity statements after your FBT return

    If you pay fringe benefits tax (FBT) by instalments, make sure you lodge all your activity statements for the FBT year ending 31 March before you lodge your FBT return. This includes the March quarter activity statement due on 28 April. This will allow us to update your FBT account and process your return quickly.

    Claiming GST input tax credits on the full amount of the meal entertainment benefits

    only claim input tax credits on benefits that you pay FBT on. For example, using the 50/50 method you only claim 50% of the total input tax credits.

    Not including FBT on private use of business assets (especially for cars and computers)

    FBT obligations for private use of business assets must be reported in your FBT return.

    Feedback

    If you have any feedback on the activity statement, phone us on 13 28 66.

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