BAS for Sole Traders: What It Is, Whether You Need to Do It, and How

BAS. Three letters that can trigger mild dread in even the most organised sole trader. If you're staring down your first one — or your fifteenth and still not entirely sure you're doing it right — this guide is for you.

Here is the short answer: you only need to lodge a BAS if you are registered for GST. GST registration is mandatory once your annual business turnover reaches $75,000. Below that threshold, it is optional — and many sole traders are not registered at all.

This guide covers what a BAS contains, when it is due, how to lodge one, and what happens if you get it wrong. BAS preparation is a 30-minute job when your records are in order. This guide explains how to get there.

The Q3 2025–26 BAS deadline is 28 April 2026. If you are not already across your records for January to March, now is the time to act.

What is a BAS, and why do sole traders need one?

A Business Activity Statement — BAS — is the form the ATO uses to collect several types of tax from businesses in a single periodic statement. Rather than paying all of your business tax obligations at the end of the financial year, the BAS system requires you to report and pay them throughout the year, usually every quarter.

Once you register for GST, the ATO automatically sends BAS statements for sole traders around two weeks before the end of each reporting period. You complete it, lodge it, and pay any amount owing — or receive a refund if your input tax credits exceed the GST you collected.

One thing is worth being clear about: a BAS is triggered by GST registration, not by simply having an ABN. Hundreds of thousands of Australian sole traders have ABNs and earn business income but never lodge a BAS, because they are under the $75,000 threshold and have not chosen to register for GST. If that is you, your tax obligations are handled through your personal income tax return instead.

Do you actually need to lodge a BAS?

The answer depends on one thing: whether you are registered for GST.

When GST registration is mandatory

You must register for GST — and therefore lodge a BAS — if any of the following apply:

• Your annual GST turnover is $75,000 or more (this is gross income, minus GST, for the current 12 months or the projected next 12 months)
• You provide taxi, limousine, or ride-sourcing services (Uber, DiDi, Ola, etc.) — regardless of how much you earn
• You want to claim fuel tax credits
• You are a non-profit organisation with turnover of $150,000 or more

If you hit the $75,000 threshold during the year, you must register within 21 days of the date you became required to. If you fail to do so, the ATO can require you to pay GST on all sales made since the date you should have registered — even if you never charged your customers GST.

When GST registration is optional

If your turnover is below $75,000 and none of the mandatory exceptions apply, registering for GST is your choice. Some sole traders voluntarily register to claim input tax credits (GST refunds) on their business purchases. Whether this makes financial sense depends on your expense profile — if most of your costs include GST, it may be worth it.

What if you are not GST-registered?

You do not lodge a BAS. Your business income and expenses are reported on your personal income tax return at the end of the financial year. You do not charge GST on your invoices, and you do not claim GST credits on your purchases.

In plain terms: ABN ≠ BAS. Having an ABN does not automatically mean you need to lodge a BAS. Only GST registration triggers that obligation.

What is actually on a BAS form?

A BAS form looks more complex than it is. Most sole traders only need to complete a handful of sections. Here is a breakdown of what each part means — and whether it applies to you.

A note on input tax credits (Label 1B)

Input tax credits are the GST component of your business expenses — and claiming them correctly is one of the most valuable things you can do on your BAS. Every time you buy something for your business from a GST-registered supplier, one-eleventh of what you paid was GST. That amount is claimable.

To claim, you need a valid tax invoice from the supplier for any purchase over $82.50 (including GST). The supplier has 28 days to provide one if you ask. Keep these records for five years.

Common claimable expenses for sole traders include: tools and equipment, vehicle costs (business portion), office supplies, business insurance, accounting and legal fees, software subscriptions, advertising and marketing, and phone and internet (business use portion only).

You cannot claim input tax credits on: wages (there is no GST on wages), bank fees and loan interest (input-taxed), private or personal purchases, purchases from non-GST-registered suppliers, or GST-free items such as basic food.

A note on PAYG instalments

If PAYG instalments have appeared on your BAS for the first time, you have not done anything wrong. The ATO automatically enters sole traders into the system once business income passes certain thresholds. These are prepayments of your own income tax — they offset against your annual bill at tax time. See the dedicated section below for the full explanation.

When is your BAS due? Key dates for 2025–26

Most sole traders lodge quarterly — the standard reporting frequency for businesses with GST turnover under $20 million. The quarterly due dates for 2025–26 are:

⚠ Coming up fast: The Q3 2025–26 BAS covers January to March 2026. The deadline is 28 April 2026. If your records for this quarter are not in order, start now — not the week before.

The online lodgement concession

If you lodge your BAS online (through myGov or accounting software), you may receive an additional two weeks beyond the standard due date to both lodge and pay. The exception is Q2, which already has a built-in one-month extension and does not receive a further concession.

Lodging through a BAS or tax agent

Registered agents operate under a separate lodgement programme with extended concession dates. For Q3 2025–26, the agent concession date is 26 May 2026. If you use an agent and provide your records to them on time, this deadline applies to your BAS.

How to lodge your BAS, step by step

Step 1: Gather your records

Before you can complete your BAS, you need:

• Total sales (GST-inclusive) for the quarter — from your invoices, bank deposits, or accounting software
• All tax invoices for business purchases over $82.50 — to support your input tax credit claims
• Bank and credit card statements to reconcile against your records
• A list of any adjustments (refunds given or received, bad debts written off)

Step 2: Calculate your GST

For cash-basis reporting (the most common method for sole traders):

1. Add up all GST-inclusive sales where payment was received during the quarter. Divide by 11 — this is your GST on sales (Label 1A).
2. Add up all GST-inclusive business purchases where payment was made during the quarter. Divide by 11 — this is your GST credit (Label 1B).
3. Subtract 1B from 1A. If the result is positive, you owe that amount to the ATO. If negative, the ATO owes you a refund.

Step 3: Add PAYG instalments (if applicable)

If the ATO has notified you that PAYG instalments apply, the instalment amount will generally be pre-filled on your BAS based on your previous year's income. Review it, vary it if your income has changed significantly, and add it to the total owing.

Step 4: Lodge and pay

There are four main options for sole trader BAS lodgement:

• myGov linked to the ATO — the most common option for sole traders. Log in to myGov, navigate to the ATO, and complete your BAS directly. No software required, and online lodgement may qualify you for the 2-week concession.
• Accounting software (Xero, MYOB, QuickBooks) — lodge directly from your software once your accounts are reconciled. Most software pre-populates your BAS figures.
• A registered BAS or tax agent — they prepare and lodge on your behalf, provide professional accuracy, and give you access to the extended concession dates.
• By phone (nil BAS only) — call 13 72 26 (24/7 automated line) to lodge a nil BAS if you had no activity during the quarter. This is important: you must still lodge even if you had zero sales.

Most sole traders use cash-basis reporting — meaning you report GST in the period you actually receive or make payment, rather than when the invoice is issued. If you are unsure which method applies to your registration, check through myGov or with your accountant before lodging.

Common BAS mistakes — and how to avoid them

These are the errors the ATO flags most frequently, and the ones most likely to trigger a review or correction request.

1. Claiming GST credits on ineligible purchases

Not everything you spend money on includes GST. Bank fees, residential rent, and loan interest are input-taxed — no GST, no credit. Basic food items, most health services, and some education costs are GST-free — again, no credit available. Claiming credits on these purchases is one of the most common BAS errors.

2. Missing or invalid tax invoices

You must hold a valid tax invoice before claiming a GST credit on any purchase over $82.50 (including GST). A valid invoice must include: the supplier's name and ABN, the date, a description of the goods or services, the GST amount or a statement that the total includes GST, and the total price. If you cannot produce the invoice, you cannot claim the credit.

3. Forgetting to lodge a nil BAS

If you had no sales and no purchases during a quarter, you still need to lodge a BAS — it just reports zero. Failing to lodge is treated the same as failing to lodge a non-nil BAS: it triggers a failure-to-lodge penalty. A nil BAS takes less than two minutes by phone (13 72 26).

4. Mixing personal and business expenses

Only the business portion of a mixed-use purchase is claimable. If you use your phone 70% for business and 30% personally, you can only claim 70% of the GST. The ATO is explicit: the test is business purpose, not payment method. Paying from a personal account is fine, but you must keep records to justify the apportionment.

5. Not reconciling with bank statements

Your total declared sales on the BAS should match the deposits in your business bank account for that period. The ATO uses data-matching to cross-reference reported income with bank and payment platform data. Unexplained discrepancies are a common trigger for review.

How to fix a mistake on a BAS you have already lodged

If you discover an error after lodgement, do not panic. Many GST errors can be corrected in your next BAS without lodging a formal revision — provided the error is below certain thresholds and is not more than 18 months old. For larger errors, or where you need a refund, you must lodge a revised BAS through myGov or your agent.

The ATO's full guidance on this is at: ato.gov.au — Fixing BAS mistakes or making adjustments

What happens if you lodge late or cannot pay?

Late lodgement has consequences, and the longer you leave it, the more expensive it becomes.

The failure-to-lodge penalty

The ATO applies a Failure to Lodge (FTL) penalty for late BAS lodgements. The penalty is calculated at one penalty unit per 28-day period (or part thereof) that the BAS is overdue. The current penalty unit value is $330. For sole traders (classified as small entities), the penalty is capped at five units — a maximum of $1,650.

When the ATO usually waives the penalty

The ATO generally does not apply the FTL penalty in isolated cases — meaning your first late lodgement in an otherwise clean history is often not penalised. The penalty is also usually waived if your late BAS results in a nil balance or a refund, and in genuine hardship cases (natural disasters, serious illness, caring responsibilities). These waivers are not automatic; you may need to contact the ATO.

What if you cannot afford to pay?

Lodge on time regardless. Filing on time stops the failure-to-lodge clock, even if you cannot pay. The ATO then applies the General Interest Charge (GIC) on the unpaid debt — currently around 11% per annum, compounding daily — but this is significantly less damaging than compounding late lodgement penalties on top.

Payment plans are available for most BAS debts under $200,000. You can set one up through myGov in minutes, with weekly, fortnightly, or monthly instalment options. If your circumstances are severe, the ATO also has an escalation pathway for hardship cases.

How to make BAS less painful: the quarterly routine that works

BAS preparation is a 30-minute task when your records are clean throughout the quarter. It is a half-weekend task when they are not. The difference is almost entirely about what you do between BAS periods, not what you do the week before the deadline.

Here is what that looks like in practice:

• Capture receipts at the point of purchase — not at the end of the quarter. A receipt left in a pocket for three months is a receipt that will not survive.
• Log business trips as you make them — destination, purpose, kilometres. The logbook method can significantly increase your vehicle deductions, but only if the records exist.
• Keep a separate bank account for business transactions. The ATO specifically recommends this. It makes reconciliation straightforward and removes the guesswork from apportioning mixed personal/business expenses.
• Set a calendar reminder three weeks before each BAS due date. This gives you time to reconcile, chase any missing invoices, and lodge without pressure.

The other thing worth doing before you lodge each quarter: reconcile your sales records against your bank statements. Total deposits should match total declared sales (adjusted for any non-income deposits). If they do not, find out why before you lodge.

PAYG instalments explained: why they appear and what to do

At some point, many sole traders open their BAS to find a PAYG instalments section that was not there before. This confuses a lot of people.

This is not an error. It is the ATO's system working as intended.

Once your business income reaches certain thresholds — instalment income of $4,000 or more, tax payable from the previous year of $1,000 or more, and estimated notional tax of $500 or more — the ATO automatically places you into the PAYG instalments system. They will notify you by letter when this happens.

PAYG instalments are prepayments of your own income tax. Instead of receiving a large tax bill at the end of the financial year when you lodge your return, you make quarterly contributions throughout the year. At tax time, those contributions are offset against your total income tax liability. Overpayment equals a refund; underpayment means you pay the difference.

Varying your instalment amount

The ATO calculates your instalment amount based on the previous year's income. If your income has changed significantly — down due to a quiet period, or up because business is strong — you can vary the instalment amount through your online services. Varying incorrectly (paying too little) may result in an interest charge, but the option exists for exactly this reason.

Exiting the PAYG instalments system

If your income drops below the entry thresholds, you can apply to have your PAYG instalments suspended or cancelled. Contact the ATO or speak with your tax agent.

Frequently asked questions

Q: Do sole traders need to lodge a BAS?

Only if you are registered for GST. GST registration is mandatory when your annual turnover reaches $75,000 (or if you drive for ride-share platforms, regardless of turnover). If you are not GST-registered, you do not lodge a BAS — your business tax obligations are handled through your personal income tax return.

Q: Do I need to do a BAS if I earn under $75,000?

Not unless you have voluntarily registered for GST. Most sole traders under the $75,000 threshold are not registered and therefore have no BAS obligation. If you are unsure whether you are GST-registered, check through myGov or with the ATO.

Q: What happens if I lodge my BAS late?

The ATO applies a Failure to Lodge (FTL) penalty of $330 per 28-day period (or part thereof) the BAS is overdue, up to a maximum of $1,650. The penalty is often waived for a first offence or if the result is nil or a refund. If you cannot pay, lodge on time anyway to stop the late lodgement penalty clock — then set up a payment plan for the debt.

Q: What is the difference between PAYG withholding and PAYG instalments?

PAYG withholding is tax you withhold from payments to others — employees or contractors without an ABN. PAYG instalments are prepayments of your own income tax on business income. Most sole traders without employees only deal with PAYG instalments, not PAYG withholding.

Q: Do I need to lodge a nil BAS if I had no income this quarter?

Yes. If you are GST-registered, you must lodge every quarter regardless of activity. A nil BAS can be lodged by calling 13 72 26 (24/7 automated line) in under two minutes. Failing to lodge a nil BAS attracts the same failure-to-lodge penalty as any other unfiled BAS.

Q: How do I fix a mistake on a BAS I already lodged?

Small GST errors can often be corrected on your next BAS without lodging a formal revision — provided the error is within the ATO's correction thresholds and is not more than 18 months old. Larger errors, or situations where you are owed a refund, require a revised BAS lodged through myGov or your agent. See ato.gov.au for the full rules on correcting GST errors.

The bottom line

BAS does not have to be the most stressful part of running your business. The obligation itself is straightforward once you understand the structure — and for most quarterly sole traders, completing it accurately takes an hour or less when records are in order.

The work that makes BAS easy happens throughout the quarter, not in the days before the deadline. That means capturing receipts when you spend, logging trips when you make them, keeping business and personal finances separate, and knowing what you can and cannot claim.

Sources & references

All factual claims in this article are sourced directly from the ATO. Key references:

• ATO — Business activity statements (BAS)
• ATO — Registering for GST
• ATO — Due dates for lodging and paying your BAS
• ATO — Failure to lodge on time penalty
• ATO — Claiming GST credits
• ATO — Choosing an accounting method for GST
• ATO — PAYG instalments
• ATO — Record keeping for business
• ATO — BAS and GST tips
• business.gov.au — Business activity statement