What is a business activity statement?
A business activity statement (BAS) is a government form that all businesses registered for GST need to lodge with the ATO.
Your BAS helps you report and pay your:
Goods and services tax (GST),
Pay as you go (PAYG) instalments,
Other taxes
When the ATO has processed your BAS, they’ll let you know if you owe tax or are entitled to a refund.
How often you need to lodge a BAS as a sole trader comes down to your annual turnover:
You don’t need to lodge a BAS if your turnover is less than $75,000 and you’re not registered for GST.
You should lodge annually if your turnover is less than $75,000, but you voluntarily register for GST.
You should lodge quarterly if your annual GST turnover is less than $20 million.
You should lodge monthly if your annual GST turnover is over $20 million.
Why BAS matters for Australian sole traders
BAS matters for Australian sole traders because it helps with:
Meeting your tax obligations
To meet your tax obligations and comply with ATO requirements, you’ll need to submit a BAS if your annual turnover is $75,000 or more.
Claiming GST credits and refunds
Claiming GST credits and refunds through a BAS can give you a financial boost. However, if you don’t lodge your BAS, you won’t get your refund.
Avoiding ATO penalties and interest
Avoiding ATO penalties and interest is as simple as lodging your BAS on time. If you don’t you may have to pay a general interest charge. This compounds every day, adding to your unpaid taxes.
Tracking your business income and expenses
Tracking your business income, expenses and wages is a great by-product of having to regularly prepare your BAS. Good record keeping gives you better control over your financial position, cash flow and tax liabilities.
Key components of a BAS for Sole Traders
The key components of a BAS vary depending on your specific business. The taxes you may need to report on and pay include:
Goods and services tax (GST)
Goods and services tax (GST) is a 10% tax on most goods, services and items sold or consumed in Australia. As a sole trader, you need to report and pay the GST you’ve collected and claim the GST you’ve paid on business purchases.
When you complete a BAS form, the difference between what you’ve collected and paid is your refund or amount owing to the ATO. If you’re using software like MYOB, you can pre-fill BAS reports and send them to the ATO directly from your software.
Pay As You Go (PAYG) Instalments
Pay As You Go (PAYG) instalments are prepayments – spread over the year – of the income tax you expect to pay. These instalments help sole traders manage cash flow and can save you from footing a big bill at the end of the financial year. You’ll need to include these in your BAS to ensure you’re paying the right amount.
PAYG Withholding
As a sole trader, you can still employ people to work for you. If you have employees or pay contractors, you may need to withhold tax from payments you make to them. You’ll then need to pay this money directly to the ATO and report it in your BAS.
However, as a sole trader, any money you take to pay yourself is a personal drawing — not a wage — and PAYG withholding doesn’t apply.
Fringe benefits tax (FBT)
Fringe benefits tax (FBT) is a tax on any non-cash benefits that your employees receive. This covers things like car parking, gym memberships, internet and phone plans for working from home and entertainment. As a sole trader, you’ll need to report and pay FBT through your BAS.
Fuel Tax Credits (FTC)
Fuel Tax Credits (FTC) provides you with a credit for the tax you’ve already paid (included in the fuel price) on fuel used to carry out your business operations. This covers fuel used by machinery, equipment, heavy vehicles, plant and light vehicles travelling off public roads. It doesn’t generally apply to your regular vehicles using public roads. The rates of FTC change regularly, so it’s essential to check these every time you do your BAS.
Luxury Car Tax (LCT)
Luxury Car Tax (LCT) is a tax on luxury cars with a value above the LCT threshold. It’s payable if you’re in the business of selling or importing luxury cars. Record LCT on your BAS, and you can keep track of any adjustments like credits or refunds if you’ve paid too much (or not enough).
Wine Equalisation Tax (WET)
Wine Equalisation Tax (WET) is a once-off tax payable if you produce, import or wholesale wine. It’s applied at 29% of the wholesale value and is reported on and paid through your BAS.
Research and development (R&D) tax incentive
The research and development (R&D) tax incentive is a tax offset set up by the Australian Government to drive innovation. You can access it if you’re conducting eligible research and development activities, and you can claim for these through your BAS.
Step-by-step guide: how to lodge your BAS as a sole trader
Here’s a step-by-step guide for how to lodge your BAS as a sole trader:
Gather your records
Gathering your records and checking that all your information is accurate and up-to-date is the first step in lodging your BAS as a sole trader. If you’re using GST software like MYOB, you can lodge your BAS with the ATO from your software. If not, you can lodge your BAS via ATO online services (accessed through your myGov account).
Choose your lodging method
Choosing your lodging methods comes down to whether you’re using accounting software or not. There are two methods to work out your GST before you prepare and submit your BAS – the calculation worksheet method (a manual worksheet) or the accounts method (directly from your accounting records, using accounting software).
Filling out the BAS form
Filling out your BAS form starts with calculating your GST amounts, so you know exactly how much you've collected and how much you can claim back. From there, you’ll fill in PAYG details and any other relevant tax obligations or incentives like fuel tax credits, R&D incentives and fringe benefits tax.
Lodging your BAS
Lodging your BAS as a sole trader can be done online using accounting software like MYOB (or other standard business reporting-enabled software) or through your myGov account. Alternatively, you can use a registered tax or BAS agent, and they’ll submit it on your behalf. You can also mail a hard copy to the ATO.
BAS payment options
BAS payments can be easily made online, by mail or in person at Australia Post. If you can’t afford to pay upfront, you can talk to the ATO to work out a payment plan. The ATO will deposit any refunds into your nominated bank account.
When to seek professional advice
Seeking professional advice is a good idea if you’re new to BAS and need clarification on your business’s requirements. Registered tax or BAS agents are trained in compliance and will help you complete and lodge your BAS correctly.
Sole trader BAS FAQs
Can you submit a BAS without an accountant?
Yes, you can lodge a BAS without an accountant using the ATO’s online services or mailing it to the ATO.
Do I need to lodge a business activity statement if no income has been generated?
Yes, if you're registered for GST, you will still need to lodge a BAS if you haven’t generated any income – a 'nil BAS'. The only exception to this is if you're no longer in business, in which case, you should inform the ATO.
Do I need to lodge a BAS if I have an ABN?
You’ll need to lodge a BAS if you’re registered for GST, regardless of having an ABN.
The simple, accurate BAS solution for sole traders
Between cash flow management, budgeting and financial planning, sole traders have to wear many financial hats. Ones that involve compliance with government regulations are often stressful.
Accounting software like MYOB can be a real game changer — it'll track your income, expenses, payroll and GST paid and collected. It’ll even auto-populate your BAS data using the information collected as part of your day-to-day operations.
Ready to take the BAS easy road? Choose your plan to get started.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
MYOB is not a registered entity pursuant to the Tax Agent Services Act 2009 (TASA) and therefore cannot provide taxation advice to clients. If you have a query concerning taxation, including filing your BAS return or annual tax statements, then you should consult with your accountant or other registered tax adviser.