Common GST mistakes in BAS reports come down to incorrect tax codes, claiming GST on ineligible items, and misreporting capital purchases — and most of these are process gaps that better system setup helps reduce.
Here are 10 common mistakes Australian small businesses make on their BAS:
Double dipping on GST (hire purchase and lease payments)
Incorrect default tax codes in the chart of accounts
Claiming GST on expenses that don't attract it
Claiming GST on all sales (including GST-free and input-taxed)
Including wages and super in G11 as purchases
Forgetting cash sales and purchases
Claiming GST on private purchases
Reporting capital purchases incorrectly at G10
Not including capital sales in G1
Claiming GST credits when the supplier isn't registered for GST
This article covers each mistake, what happens if you get your BAS wrong, and how to set up your system so these errors are less likely to slip through.
Key takeaways
Incorrect default tax codes cascade errors into every BAS — get your chart of accounts reviewed at setup, not after your first mistake.
G10 is for capital purchases; G11 is for non-capital purchases (trading stock, running expenses, leases). Whether G10 amounts are GST-inclusive or GST-exclusive depends on the reporting method you use — check the ATO BAS instructions for current treatment.
Wages, super, drawings, and director fees are BAS-excluded from GST labels — report wages at W1, not G11.
Reconcile your bank accounts before lodging, not after — unreconciled transactions mean missing income or expenses in your BAS figures.
If you make a mistake, the ATO has a process for correcting it — see the "What happens if you get your BAS wrong" section below.
Accounting software with built-in GST tracking can help surface issues before lodgement.
GST and BAS errors to watch for
1. Accidental 'double dipping' on GST
Claiming GST twice on the same purchase is easier to do than most business owners realise — particularly with hire purchase or chattel mortgage agreements.
Here's how it happens: you buy a work vehicle on hire purchase and claim the full GST credit upfront on the purchase. Then each monthly repayment gets coded with GST as well. The result is you've claimed the GST component twice — once on the original purchase and again across your monthly payments.
Similar issues can arise with finance or lease arrangements, depending on how the asset and repayments are treated. Check the original agreement and ask your accountant or registered BAS agent how repayments should be coded.
How to avoid it: Check the original purchase invoice to confirm whether you already claimed the GST credit. Then review how your monthly repayments are coded — if GST was claimed upfront, repayments should be reviewed so GST is not claimed a second time. Confirm the correct coding with your accountant or registered BAS agent.
2. Incorrect tax codes in your chart of accounts
Incorrect default tax codes in your chart of accounts are a common setup error that repeats every quarter — because every transaction auto-coded with the wrong default flows straight into your BAS.
The most frequent confusion is between these tax codes:
GST (10% GST applies) — used for standard taxable purchases and sales
FRE (GST-free) — for purchases and sales that don't attract GST (e.g. basic food, some medical services)
CAP (capital purchase) — for business assets over the capital threshold
INP (input-taxed) — for input-taxed supplies like residential rent or financial supplies where you generally can't claim GST credits
When your chart of accounts has the wrong default assigned to an expense category — say, coding bank charges as GST when they're actually GST-free — that error multiplies across every transaction in that category, every quarter.
How to avoid it: Ask your accountant or BAS agent to review your chart of accounts defaults before (or immediately after) your first BAS. This is a setup problem — get it right once and it flows correctly ongoing. If you've been lodging for a while, an annual chart of accounts audit is worth the 30 minutes it takes.
3. Claiming GST against all expenses
Not every business expense includes GST — claiming it when it's not there inflates your GST credits and can lead to incorrect BAS figures.
Common expenses that may not include claimable GST (some include no GST, some have partial GST, and some depend on the supplier and invoice):
Bank charges and merchant fees
Government fines and penalties (generally no GST applies, but check the specific charge)
Motor vehicle registration
Council rates (generally GST-free)
ASIC annual review fees
Google Ads transaction fees
PayPal transaction fees (financial supply)
Interest on loans
Insurance premiums (check your policy — GST treatment varies by type)
Stamp duty
How to avoid it: Before coding any expense with a GST claim, check the invoice. For purchases over $82.50 (including GST), you need a valid tax invoice to claim a GST credit (ATO, 2026). Always check with your accountant or BAS agent.
4. Claiming GST against all sales
Some sales are GST-free or input-taxed — coding them as taxable means you're either overcharging customers or over-reporting GST to the ATO.
What goes wrong: A sale that should be coded GST-free or input-taxed gets coded as taxable by default, inflating the GST you report at 1A and creating follow-up work if the figures need to be checked.
Examples of sales that don't attract GST:
Exports (generally GST-free — conditions apply)
Basic food (GST-free)
Some medical and health services (GST-free)
Some educational courses (GST-free for certain government-funded or accredited courses)
Financial supplies such as lending or insurance (input-taxed)
Residential rent (input-taxed)
How to avoid it: The key distinction is between GST-free and input-taxed. GST-free means no GST is charged on the sale, but you can still claim input tax credits on related purchases. Input-taxed means no GST is charged, and you generally cannot claim input credits on purchases related to making those sales. Set the correct default tax code for each revenue account so sales are classified correctly from the start.
5. Including wages and superannuation in G11 as a purchase
Wages are BAS-excluded from GST reporting labels — they belong at W1 (gross wages), not in G11 (non-capital purchases).
This is a common error for new business owners completing their own BAS. Wages don't attract GST, so they have no place in the GST section of your activity statement. Including them in G11 inflates your reported purchases and can lead to incorrect BAS figures.
Other BAS-excluded items that don't belong in G11:
Drawings (money taken out of the business by the owner) — these don't attract GST and are not reported in GST labels. Check with your accountant if unsure about the treatment for your situation.
Director fees — same as drawings, these are excluded from GST reporting. Check with your accountant if unsure about the treatment for your situation.
Loan repayments (principal component)
Private expenses
Where wages go instead: Report gross wages (before tax) at W1 in the PAYG withholding section of your BAS. Tax withheld goes at W2. Superannuation is not reported at W1 — it's separate from the BAS wages section.
6. Forgetting to include all cash sales and purchases
If your business receives or makes cash payments that don't go through your bank account, they still need to appear on your BAS.
If you operate in a TPAR-reportable industry (such as construction, cleaning, or courier services), some payments made to your business may also be reported to the ATO by other businesses via Taxable Payments Annual Reports. Cash sales and purchases still need to be recorded even if they do not pass through your bank account.
Unreported cash sales understate your G1 (total sales) and your 1A (GST on sales). Unreported cash purchases mean you're missing legitimate GST credits.
How to avoid it: Record all cash transactions at the time of sale or purchase — not at the end of the quarter. If you operate in a TPAR-reportable industry, some payments made to your business may also be reported to the ATO by other businesses. For purchases over $82.50 (including GST), keep a valid tax invoice where you intend to claim a GST credit.
7. Claiming GST on private purchases
You can claim GST credits on purchases that relate to your business — not on personal expenses run through the business account.
This applies to items like personal groceries, private car expenses (unless the vehicle is used for business), personal insurance, and home expenses unrelated to a home office.
For mixed-use assets — a vehicle used for both work and personal trips, for example — you can generally claim the GST credit for the business-use proportion only. The ATO expects you to apportion based on actual business use.
How to avoid it: Keep business and personal expenses separate wherever possible. For mixed-use items, maintain a logbook or reasonable estimate of business use, and claim only that proportion.
8. Reporting capital purchases incorrectly at G10
The ATO separates long-lasting assets from everyday expenses, so businesses often mix them up on their BAS.
Capital purchases refers to expensive assets bought for long-term use in your business. The capital purchases go in G10 on your BAS, not in G11, where you include everyday operating costs and non-capital purchases.
G10 capital assets may include:
machinery
cash registers
computers
cars
land or buildings your business
What goes in G11 section of your BAS: Trading stock, everyday running expenses and leases — your regular operating costs.
A common error is coding a capital purchase (say, a $15,000 work ute or a $3,000 computer setup) into G11 instead of G10. The G10/G11 split helps classify capital and non-capital purchases correctly on your BAS — and incorrect classification can lead to incorrect BAS figures.
How to avoid it: Set up a separate tax code (CAP) for capital purchases in your chart of accounts and categorise capital purchases separate from day-to-day costs throughout the financial year.
9. Not including capital sales in G1 (total sales)
When you sell a business asset — a vehicle, piece of equipment, or office furniture — that sale needs to be included in G1 (total sales) on your BAS, just like your regular trading sales.
What goes wrong: A business owner sells an old work vehicle or trades in equipment and doesn't realise the sale proceeds need to be reported. G1 includes sales of business assets, motor vehicles and trade-ins. The full sale amount (including any trade-in value) goes into G1. The GST component of that capital sale goes into 1A (GST on sales).
How to avoid it: When you dispose of or sell any business asset, record it as a sale in your accounting system with the correct GST treatment — even if the payment comes as a trade-in credit rather than cash in the bank.
10. Claiming GST credits where the supplier isn't registered for GST
You can generally only claim a GST credit if the supplier is registered for GST, GST applies to the purchase, and — for purchases over $82.50 including GST — you hold a valid tax invoice.
Check the Australian Business Register to verify whether a supplier is registered for GST before claiming a credit. Enter their ABN and confirm their GST registration status.
If a supplier doesn't quote an ABN on their invoice, you may need to withhold 47% from the payment under PAYG withholding rules (ATO, 2025), unless an exception applies.
Common exceptions where you may not need to withhold include:
The total payment is $75 or less (excluding GST)
The supply is wholly of a private or domestic nature
These are examples only — check the ATO's full list of exceptions for no-ABN withholding that applies to your situation.
How to avoid it: Make it a habit to check a supplier's ABN and GST registration before the first payment. Record their ABN in your contacts so it's checked once and used every time.
Reconcile your accounts before you lodge
Reconciling your bank accounts, creditors, and debtors before lodging catches errors that would otherwise flow straight into your BAS.
Unreconciled transactions mean missing income or expenses in your BAS figures — a bank deposit you haven't matched might be unreported income, and a payment you haven't allocated could be a missed GST credit.
What to reconcile before lodging:
Bank accounts and credit cards — match every bank transaction to a recorded entry
Accounts receivable and payable — confirm outstanding invoices and bills are current
GST control account — check the balance aligns with your BAS figures
When you reconcile regularly — weekly or fortnightly rather than in a last-minute rush at quarter-end — mismatches surface while the transaction is still fresh in your memory. Accounting software with connected bank feeds helps make this a regular habit rather than a quarterly ordeal.
"Less than half what I used to spend for the BAS — because previously I was doing manual reconciliation, and now it's automated." — Suresh Patel, MYOB Business customer
For a deeper guide, see how to do a balance sheet reconciliation.
What happens if you get your BAS wrong
If you make a mistake on your BAS, the ATO may issue an amended assessment, charge general interest on underpaid amounts, or apply penalties for late or incorrect lodgement.
The consequences depend on the nature and size of the error, whether you correct it voluntarily, and your compliance history. Correcting mistakes promptly can help reduce follow-up issues, especially compared with leaving errors unresolved.
Common outcomes of BAS errors:
Amendment — the ATO corrects your BAS and adjusts your GST refund or liability
General interest charge (GIC) — applied to any shortfall amount from the original due date
Administrative penalties — may apply for false or misleading statements, scaled by the level of culpability
The important thing is to correct mistakes as soon as you identify them. The ATO has a defined process for making revisions to previously lodged activity statements.
For the official correction process and thresholds, see the ATO guidance on fixing BAS mistakes. If the error is complex or involves a significant amount, review it with a registered tax agent or BAS agent before making the revision.
Set up your system to help reduce BAS mistakes
Most BAS mistakes are process problems — and a few system changes at the start can help reduce them every quarter.
Five things to do now:
Get your default tax codes reviewed — ask your accountant or BAS agent to check your chart of accounts defaults. This single step helps reduce common BAS errors from repeating.
Connect your bank feeds — transactions import automatically, reducing the chance of missed income or expenses.
Reconcile weekly or fortnightly — catching mismatches while they're fresh is easier than untangling a quarter's worth of transactions the night before lodging.
Keep digital copies of all tax invoices — bank statements alone don't prove a GST credit. For purchases over $82.50 (including GST), the ATO requires a valid tax invoice to claim a GST credit.
Use accounting software with built-in GST tracking — software that maps transactions to the right GST codes helps surface issues before they reach your BAS.
MYOB Business supports GST tracking and BAS preparation for Australian small businesses. MYOB’s AI BAS (Beta), available to eligible non-employing MYOB Business Lite and Pro customers in Australia, flags missing documents, GST issues, and transactions that need attention as they happen. You stay in control and check your figures before you lodge with the ATO.
90% of MYOB Business customers surveyed are confident their records are BAS-ready (Based on a survey of 319 MYOB Business customers in Australia, Nov 2025. Reflects self-reported customer confidence only; not a guarantee of ATO compliance or BAS accuracy).
For decades, MYOB has helped Australian SMEs manage accounting, GST and BAS workflows — built to support the way small businesses actually work.
Frequently asked questions
Does G10 on the BAS include GST?
G10 is the BAS label for capital purchases (business assets costing more than $1,000). Whether you report the GST-inclusive or GST-exclusive amount at G10 depends on the reporting method you use. If you're using the accounts method and have chosen to show amounts as GST-exclusive, remove GST from the amount at G10. If you're using the calculation worksheet method, include GST. Check the ATO BAS instructions for the treatment that applies to your business.
Are wages BAS excluded?
Wages do not appear in the GST labels (G1 through G20) on your BAS — they are BAS-excluded from GST reporting. Report gross wages at W1 and tax withheld at W2 in the PAYG withholding section of your activity statement. Superannuation is not reported in either section.
What happens if I accidentally include a BAS-excluded item?
Including a BAS-excluded item (such as wages or drawings) in your GST labels inflates your reported purchases or sales, which can lead to an incorrect GST refund or liability. The ATO has a process for correcting mistakes on previously lodged BAS — check their guidance on fixing BAS mistakes for the steps.
What's the difference between GST-free and input-taxed?
The main difference between GST-free and input-taxed is what happens to your input tax credits. GST-free supplies carry no GST, but you can still claim input tax credits on purchases related to making those supplies. Input-taxed supplies also carry no GST, but you generally cannot claim input tax credits on related purchases. Common GST-free items include basic food and exports. Common input-taxed items include residential rent and financial supplies like lending.
Do I need a BAS agent or can I lodge my own BAS?
You can lodge your own BAS through the ATO's online services or through connected accounting software. A registered BAS agent or tax agent can help if your situation is complex — for example, if you have a mix of taxable, GST-free, and input-taxed supplies. Using a registered agent may also give you access to extended lodgement deadlines.
How do I fix a BAS mistake after lodging?
How you fix a BAS mistake depends on the type, timing and size of the error. The ATO may allow you to correct some errors in a later BAS or revise the original activity statement. Check ATO guidance on fixing BAS mistakes or speak to a registered tax agent or BAS agent.
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.
Contributors
MYOB Subject Matter Experts