BAS & GST Guide for Melbourne Small Businesses

When must a Melbourne business register for GST?

You must register for GST when your annual turnover reaches or is expected to reach $75,000 ($150,000 for non-profit organisations). Turnover means your gross income before expenses — not profit. You have 21 days from the day you exceed the threshold to apply. Late registration does not eliminate the obligation: the ATO can back-date your registration and assess the GST you should have collected from the date you were required to register, creating a liability entirely from your own revenue. Voluntary registration before you hit the threshold is worth considering if you are selling primarily to other GST-registered businesses, as it allows both parties to claim input tax credits.

What is actually included in a Business Activity Statement?

A BAS reports your GST collected on sales, GST paid on purchases (your input tax credits), and — depending on your obligations — PAYG withholding from employee wages, PAYG instalments for your own income tax, wine equalisation tax, and luxury car tax. Most small businesses will only need to deal with the GST and PAYG withholding sections. Your net GST position is the difference between GST collected and input tax credits claimed — if you collected more than you claimed, you remit the difference; if you claimed more (common during periods of high capital expenditure), the ATO refunds you.

Should you report quarterly or monthly?

Quarterly reporting applies to most Melbourne small businesses. Your GST quarters run July–September (due 28 October), October–December (due 28 February), January–March (due 28 April), and April–June (due 28 July). Lodging through a registered tax agent extends most of these deadlines by four weeks. Monthly reporting is compulsory only if your annual GST turnover exceeds $20 million, or if you are voluntarily electing monthly to accelerate refunds during a construction or fit-out phase. The downside of monthly reporting is twelve lodgements per year rather than four — increased administrative burden that rarely justifies it below the $20 million threshold.

How do input tax credits work?

You can claim the GST component of business purchases back from the ATO, reducing your net GST liability. To claim, the purchase must have been made for a creditable purpose (business use, not private), the supplier must be registered for GST, and you must hold a valid tax invoice. Partial claims apply where an expense has mixed business and private use — you apportion the credit. Common creditable purchases include accountant fees, business software subscriptions, trade supplies, vehicle expenses, and rent on commercial premises. Purchases from suppliers not registered for GST contain no GST and therefore carry no input tax credit entitlement.

What are the most common GST coding errors?

Coding wages and superannuation as GST-inclusive is the most frequent mistake — both are GST-free and should be coded at 0% GST. Claiming input tax credits on personal or mixed-use expenses without apportionment is common and is a standard ATO audit focus. Misclassifying GST-free items — fresh food, most medical services, most financial services, residential rent — as taxable creates an inflated input tax credit claim. Duplicate entries from importing bank statement transactions while also entering supplier invoices manually result in overclaimed credits. A quarterly reconciliation of your GST account balance against your BAS lodgements takes 15 minutes and catches these errors before the ATO does.

What are the penalties for late BAS lodgement?

The ATO applies a failure-to-lodge penalty for late BAS submissions. For small businesses (turnover under $1 million), the penalty is one penalty unit ($330 from 1 July 2025) per 28-day period or part thereof that the statement is overdue, up to a maximum of five penalty units ($1,650). For medium businesses ($1 million to $20 million), the multiplier is two per period. For large businesses, it is five per period. These penalties apply per BAS, so four missed quarterly lodgements can accumulate to over $6,600 in penalties for a small business before any shortfall amount penalties are assessed. The ATO has discretion to remit penalties for businesses with a good compliance history and a genuine reason for the delay — but this requires a formal remission request.