7 Common BAS Mistakes Geelong Business Owners Make (and How to Fix Them)

If you run a business in Geelong — whether it's a café on Pakington Street, a trade business working across the Bellarine, or an allied health clinic in Newtown — your Business Activity Statement is probably the compliance task you dread most. It's also one of the easiest places to make a costly mistake without realising it until the ATO comes knocking. Here are the seven errors we fix most often in new client files, and exactly how to stop making them.

1. Claiming GST on GST-free or input-taxed expenses

Not everything you buy for your business carries GST, and claiming a credit on it anyway is one of the most common errors we see. Under the A New Tax System (Goods and Services Tax) Act 1999, certain supplies are GST-free (most basic food, many health services) and others are input-taxed (residential rent, most financial supplies like bank fees and loan interest).

• Common trap: a café owner claims GST on fresh produce invoices that are actually GST-free.
• Common trap: claiming GST on bank fees or interest charges, which are input-taxed.
• Fix: set up Xero tax rates correctly at the supplier/account level so the right GST treatment applies automatically every time, rather than relying on manual judgement call each transaction.

2. Missing the BAS lodgement deadline

Quarterly BAS is due 28 days after the end of each quarter — 28 October, 28 February, 28 April and 28 July. Miss it and the ATO can apply a Failure to Lodge (FTL) penalty in penalty-unit increments for every 28 days it's overdue, plus general interest charge (GIC) on any unpaid amount.

• Business owners juggling invoicing, staff and jobs on-site around Geelong often lose track of the date entirely.
• Fix: a registered BAS Agent lodging on your behalf usually gets an automatic four-week extension — so instead of 28 October, you get until 25 November.

3. Mixing up cash and accrual GST reporting methods

Businesses under the $10 million aggregated turnover threshold can generally choose to report GST on a cash basis (when money changes hands) or accrual basis (when the invoice is raised). The problem arises when a business switches inconsistently between the two mid-year, or when Xero is set to one method while the bookkeeper reports manually on another.

• This mismatch either overstates or understates GST payable for a period.
• Fix: confirm your reporting method with your BAS Agent, lock it into your Xero GST settings, and keep it consistent unless you formally notify the ATO of a change.

4. Not reconciling Xero before lodging

This is the single biggest driver of inaccurate BAS figures we see across Geelong clients. If bank transactions sit unreconciled, or if there are duplicate or missing entries, the GST reported simply won't match reality.

• Unreconciled loan drawdowns, owner contributions, or transfers between accounts can accidentally get coded as income and inflate GST payable.
• Fix: run a full bank reconciliation and check the GST Reconciliation Report in Xero against your BAS figures before every lodgement — not after.

5. Getting PAYG withholding wrong

PAYG withholding errors usually come down to one of two things: using outdated withholding tables, or misclassifying a worker as a contractor when they're legally an employee under the Fair Work Act 2009. Genuine contractors invoice with an ABN and aren't subject to PAYG withholding; misclassified "contractors" who are really employees create a compliance headache that goes well beyond BAS.

• Check current ATO PAYG withholding schedules — they update periodically, and using last year's table under-withholds tax.
• If you're unsure whether someone is an employee or contractor, the Fair Work Ombudsman has a clear multi-factor test.
• Fix: run payroll through Xero's payroll module with the tax tables kept current, not a manual spreadsheet.

6. Claiming GST credits without a valid tax invoice

Under section 29-70 of the GST Act 1999, you generally need a valid tax invoice to claim a GST credit on any purchase over $82.50 including GST. A valid tax invoice needs the supplier's identity and ABN, a description of what was supplied, the GST amount (or a statement that the total includes GST), and the date of issue.

• We regularly see GST claimed off supplier statements, quotes, or receipts that don't meet these requirements.
• Fix: if you can't produce a compliant tax invoice for a claimed expense, don't claim the GST credit until you can — the ATO can and does deny these on review.

7. DIY lodgement without a registered BAS Agent

There's nothing illegal about lodging your own BAS. The risk is that when errors happen — and they usually do, given how many moving parts sit behind a single BAS figure — you carry the full liability alone. Under the Tax Agent Services Act 2009 (TASA), only a registered BAS Agent can legally charge a fee for BAS preparation and lodgement services, and using one gives you access to safe harbour provisions, which can protect you from certain penalties if the agent makes a genuine mistake despite giving them accurate and timely information.

• You also get the extended lodgement deadlines available only through a registered agent.
• Fix: check any bookkeeper or BAS preparer's registration on the Tax Practitioners Board register before engaging them.

Most of these mistakes aren't the result of carelessness — they happen because BAS sits at the intersection of GST law, payroll rules and day-to-day bookkeeping, and very few business owners have time to keep across all three while also running the business. The practical next step is simple: reconcile your Xero file properly before your next lodgement, confirm your GST reporting method is locked in, and get a registered BAS Agent to check your last two BAS lodgements against your General Ledger. Catching an error before the ATO does is always cheaper and less stressful than fixing one after a review letter arrives.