How to Fix BAS Mistakes Without ATO Penalties

Did you know that thousands of businesses in Australia make silly mistakes when lodging their bills of sale every quarter? This not only costs them money but can also put your business at legal risk. A Business Activity Statement or BAS is a report that business owners must lodge with the Australian Taxation Office (ATO) to state their Goods and Services Tax (GST), Pay As You Go (PAYG) instalments and other tax payments.

Although lodging a BAS is a straightforward process, many businesses make mistakes, such as incorrect GST, inaccurate employee income reporting, double counting of purchases, etc. These could cause compliance issues, affecting your overall business growth. Fortunately, ATO has created processes to help you fix BAS mistakes without penalties. Make sure you act as quickly as possible to save time, money and unwanted stress.

Here is a comprehensive guide to help you understand common BAS mistakes and the process to fix them without stressing the ATO. It is always good to consult Melbourne bookkeepers to prevent future errors and penalties.

Let’s Get Started!

1. What Are the Common BAS Mistakes Businesses Make?

Despite new age accounting software and automation, BAS lodgement errors are still on the rise. Whether you have a small retail store or a giant venture, a basic slip up can affect your GST, PAYG or cash flow. These reflect the most recurring blunders that businesses consistently commit. These are:

• Inaccurate GST Reporting: Entering the wrong code will directly affect your GST liability. For instance, treating a GST free sale as taxable or vice versa is the foundation for a BAS blunder. Many companies take input tax credits on GST free products or personal items, such as bank charges. This can inflate GST claims while triggering an ATO review.
• Discrepancies in Bank Statements/Records: Submitting a BAS lodgement without reconciling bank statements and accounting records can lead to BAS mistakes. Duplicate records, deposits, etc are common issues that can lead to serious blunders. Ensure you keep personal and business accounts separate.
• Overlooked PYYG withholding: This must be reported by businesses that have a team of trained employees. Many businesses often forget to record wages in the BAS or record them in the wrong category, leading to payroll related issues.
• Quarterly BAS lodgement gaps, for example, missing a few items when recording a refund, lead to financial discrepancies.
• Miscalculations in employ tax or super contributions.

2. Does the ATO Impose Penalties for BAS Mistakes?

The ATO knows the fact that most businesses make silly BAS blunders. Therefore, they treat honest errors differently from non compliance. If you spot a BAS mistake and disclose it promptly, you could prevent potential penalties.

Penalties are often imposed when a business repeatedly commits errors. In such a scenario, lodging a correction as soon as you notice the blunder can save you money and serious repercussions. That’s why hiring experienced Melbourne bookkeepers makes a world of difference.

3. Step by Step Guide to Fixing a BAS Mistake

Make sure you act as quickly as possible to avoid ATO penalties:

Address the Errors:

Carefully review your BAS to spot discrepancies, such as incorrect GST reporting. You’ll need to check receipts, invoices, payroll entries and other BAS components to find potential errors.

Decide the Correction Type:

In this step, you’ll need to determine whether the mistake affects PAYG, GST and other elements of BAS. Understanding the type of blunder can help you make corrections easily.

Determine Between Revision or Adjustment in Next BAS:

If your BAS report has minor blunders, they can be corrected in your next lodgement. However, critical ones require a formal BAS revision in Australia.

Log in to the ATO Business Portal:

You can directly submit corrections through the ATO portal. You can even ask your bookkeeper in Melbourne to handle the process.

Submit a Revised BAS:

Completing the BAS amendment form or lodging a revised BAS ensures the ATO has the correct records. Ensure you add the revised amounts along with relevant notes.

4. When to Make a BAS Adjustment

An adjustment occurs when something changes after you lodge your BAS. This could be due to:

• A price change: If you issued an invoice, but the final sale price was adjusted.
• A purchase refund: You claimed GST on an expense, but later received a refund for that purchase. Under ATO rules on claim a GST credit, if the transaction is reversed, you must adjust or reverse the GST credit you previously claimed. 
• When a customer returns your goods

In these scenarios, adjustments are reported in your next BAS.

5. How to Avoid BAS Mistakes in Future

First things first, use accounting software as it will automatically calculate GST and PAYG amounts, reducing human errors. Make sure you regularly reconcile your bank statements and update your books frequently. Moreover, staying updated with ATO rules, such as changes in tax legislation, etc can help prevent future errors.

If you don’t want to make silly mistakes, book trained bookkeepers in Melbourne and solve complex transactions while meeting your ATO bookkeeping requirements. They keep a close eye on cash flow, GST and PAYG reports to prevent financial blunders.

Wrapping Up

Fixing BAS mistakes isn’t a complex task. The key is to act promptly and make changes accordingly. The sooner you resolve the issue, the easier it is prevent ATO penalties and other costly fines.