Business Activity Statements (BAS) are a routine part of running a business in Australia — yet thousands of business owners still make mistakes that lead to ATO penalties, interest charges, and unnecessary stress.

As ATO reporting becomes more data-driven in 2026, even small mistakes can trigger audits, warning letters, or compliance checks. The good news? Most BAS errors are easy to avoid with the right processes and bookkeeping support.

In this guide, we break down the five most common BAS errors and how to avoid them to keep your business compliant, stress-free, and penalty-free.

1. Incorrect GST Reporting (Overclaiming or Underclaiming)

One of the biggest and most common BAS mistakes is incorrectly reporting GST — either:

• claiming GST credits you’re not entitled to, or
• Failing to claim the GST you are entitled to.
  

Why it happens

• Mixing personal and business expenses
• Misclassifying transactions
• Missing tax invoices
• Not reconciling GST collected vs GST paid
  

Risks in 2026

The ATO’s enhanced data-matching tools automatically compare your BAS with:

• bank transactions
• supplier reports
• e-invoicing data
• payroll
• past BAS lodgements

Any mismatch can trigger an automated audit.

How to avoid this error

✔ Reconcile GST accounts monthly
✔ Only claim GST when you have a valid tax invoice
✔ Use proper expense categories
✔ Keep personal and business expenses separate
✔ Use bookkeeping software that tracks GST on every transaction

Pro Tip: Let a bookkeeper review your GST before each BAS lodgement — it’s cheaper than paying penalties later.

Also Check: The Ultimate Guide to Bookkeeping Services for Small Businesses in Perth (2025)

2. Missing or Incorrect PAYG Withholding

If your business has employees or contractors under voluntary withholding agreements, you must report PAYG withholding correctly in every BAS.

Common mistakes

• Forgetting to withhold tax from employee wages
• Incorrect PAYG calculation
• Misreporting contractor payments
• Not reconciling STP (Single Touch Payroll) with BAS
  

ATO Focus in 2026

The ATO now matches your STP submissions with your BAS instantly — meaning inconsistencies are flagged automatically.

How to avoid this error

✔ Ensure payroll is processed through STP-enabled software
✔ Double-check PAYG calculations before lodging
✔ Reconcile wages, PAYG, and super monthly
✔ Keep contractor agreements up to date

Avoid ATO penalties by ensuring your payroll system and BAS data match perfectly.

3. Lodging BAS Late

Late BAS lodgement is one of the fastest ways to attract:

• failure to lodge penalties
• general interest charges (GIC)
• unwanted ATO attention

Why businesses lodge late

• Missing paperwork
• Cashflow issues
• Bookkeeping backlog
• Forgetting quarterly deadlines
• Lack of clarity on what needs reporting

ATO’s Approach in 2026

Late lodgement is now tracked automatically, and the ATO sends electronic reminders — but frequent delays can place your business in a “higher-risk compliance category.”

How to avoid this error

✔ Use a BAS Agent (you get extended deadlines!)
✔ Set automated BAS reminders in your calendar
✔ Keep transactions updated weekly
✔ Reconcile monthly instead of rushing quarterly

Tip: JGW Bookkeeping clients receive BAS reminders and extended agent lodgement dates — reducing late fees and stress.

Also Check: Payroll Outsourcing Services in Perth: Is It Right for Your Business?

4. Miscalculating Fuel Tax Credits (FTC) or Not Claiming Them

Many businesses simply forget to claim fuel tax credits, while others claim the wrong rate.

Why this happens

• Unaware that their business is eligible
• Using outdated ATO rates
• Not tracking fuel use properly
• Incorrect allocation between on-road and off-road use

What’s changing in 2026?

Fuel tax credit rates are adjusted twice yearly and ATO compliance checks have increased.

How to avoid this error

✔ Always check the latest FTC rates before lodging BAS
✔ Maintain accurate fuel use records
✔ Separate on-road vs off-road usage
✔ Ask your BAS Agent to assess FTC eligibility

FTC mistakes lead to significant penalties, especially when overclaiming — get this checked by a professional.

5. Poor Record Keeping and Missing Documentation

Bad bookkeeping is the root cause of most BAS problems.

Common record-keeping issues

• Not saving tax invoices
• Incomplete bank reconciliation
• Mixing business and personal spending
• Not tracking cash payments
• Not keeping digital backups

ATO requirement

You must keep business records for 5 years — digital or physical.

How to avoid this error

✔ Use cloud bookkeeping software (Xero, MYOB, QuickBooks)
✔ Upload invoices immediately using phone apps
✔ Keep digital backups of all receipts
✔ Reconcile bank accounts weekly
✔ Let a bookkeeper maintain your accounts

In 2026, the ATO routinely requests digital records during audits — so organised bookkeeping is essential.

Bonus: How to Completely Avoid BAS Penalties in 2026

1. Keep your bookkeeping updated monthly

Prevent errors from building up across the quarter.

2. Use a Registered BAS Agent

Agents get extended deadlines and can speak directly with the ATO on your behalf.

3. Use automation tools

E-invoicing, bank feeds, and automatic reconciliations reduce human error.

4. Review your BAS before lodgement

A 10-minute check can save hundreds in penalties.

5. Stay updated with ATO rule changes

2026  includes new compliance technology — mistakes are identified faster than ever.

Final Thoughts

BAS errors can cost your business time, stress, and money. But with good bookkeeping practices and professional support, you can ensure your BAS is accurate, compliant, and penalty-free every quarter.

If you want peace of mind and error-free BAS lodgements in 2026, our team at JGW Bookkeeping is here to help.

Need help with BAS, GST, payroll, or bookkeeping?

Book a consultation today — we’ll handle the numbers so you can focus on growing your business.