To lodge your BAS using Xero, make sure your bank is reconciled and transactions are coded correctly, run and review the Activity Statement report, then lodge directly to the ATO through Xero’s connected lodgement, or use the figures to lodge via your agent or the ATO portal. Accurate coding is the key to a correct BAS.

How to Lodge Your BAS Using Xero: A Complete Guide for Australian Businesses

If you run a business in Australia, your BAS — Business Activity Statement — is one of the most important tax obligations you’ll manage throughout the year. Get it right, and you stay on the ATO’s good side, maintain healthy cash flow, and avoid penalties. Get it wrong, and you could be facing interest charges, audits, or a nasty catch-up bill you weren’t expecting.

The good news is that Xero makes the BAS process significantly more manageable than it used to be. With automated GST tracking, built-in reconciliation tools, and direct lodgement capability, most Australian small business owners can handle their BAS in Xero without drowning in spreadsheets or manual calculations — provided their books are kept in good order throughout the quarter.

In this guide, we’ll walk you through everything you need to know: what a BAS is, who needs to lodge one, how to prepare and lodge your BAS using Xero, the mistakes that catch businesses out, and when it genuinely makes sense to hand the whole thing over to a registered BAS Agent.

What Is a BAS? (Business Activity Statement Explained Simply)

A Business Activity Statement — almost always referred to as a BAS — is a form you submit to the Australian Taxation Office (ATO) to report and pay several tax obligations in one hit. Depending on your business structure and circumstances, a BAS can include:

• GST (Goods and Services Tax) — the 10% tax collected on most sales, less the GST you’ve paid on business purchases
• PAYG Withholding — the tax you’ve withheld from employees’ wages and need to remit to the ATO
• PAYG Instalments — prepayments toward your own income tax liability (common for sole traders and company directors)
• Fuel Tax Credits — if applicable to your industry
• Wine Equalisation Tax or Luxury Car Tax — where relevant

For most small to medium businesses, the BAS is primarily about GST and PAYG withholding. The ATO uses the information you report to reconcile what you’ve collected from customers and what you owe — or in some periods, what you’re owed as a refund.

You can find the ATO’s official overview of Business Activity Statements here: ATO — Business Activity Statements (BAS).

Who Needs to Lodge a BAS in Australia?

Not every Australian business needs to lodge a BAS. Your obligation depends primarily on whether you’re registered for GST.

The GST Registration Threshold

You are required to register for GST — and therefore lodge a BAS — if your business has a GST turnover of $75,000 or more per year. For non-profit organisations, the threshold is $150,000. If you’re a taxi driver or ride-share driver (including Uber), you must register for GST regardless of your turnover.

Even if you’re below the $75,000 threshold, you can choose to voluntarily register for GST. This is sometimes worthwhile if your clients are GST-registered businesses who can claim the GST back, or if you have significant business purchases you’d like to claim input tax credits on. Once you register, you must lodge a BAS.

You can check the ATO’s GST registration requirements here: ATO — Registering for GST.

Quarterly vs Monthly BAS Lodgement

Most small businesses lodge their BAS quarterly. The four quarters follow the Australian financial year:

• Q1: July — September (due 28 October)
• Q2: October — December (due 28 February)
• Q3: January — March (due 28 April)
• Q4: April — June (due 28 July)

Businesses with a GST turnover exceeding $20 million are required to lodge and pay monthly. Some businesses also voluntarily opt for monthly lodgement to manage cash flow more actively — paying smaller, more frequent amounts rather than one large quarterly amount.

If you have employees, you’re also paying PAYG withholding — usually monthly or quarterly depending on the amount you withhold. Your BAS will capture this as well.

How Xero Helps With Your BAS

Xero is built with Australian tax compliance in mind, and the BAS functionality is one of its strongest features. Here’s how Xero works to make the BAS process more accurate and efficient.

GST Coding in Xero

Every transaction in Xero is assigned a tax rate — also called a GST code. These codes tell Xero how to treat each transaction for GST purposes. The most common codes you’ll encounter are:

• GST (10%) — standard taxable sales and purchases
• BAS Excluded — transactions that don’t affect your BAS at all (wages, ATO payments, owner drawings)
• GST Free (0%) — sales or purchases that are GST-free under the law (certain food, exported goods, some medical services)
• Input Taxed — for financial supplies such as bank interest or residential rent

Getting these codes right is absolutely critical. Xero uses them to automatically populate your BAS fields — so if a transaction is coded incorrectly, your BAS figures will be wrong before you even open the BAS screen.

How Xero Tracks GST Automatically

Once your transactions are correctly coded, Xero’s GST tracking does the heavy lifting. As you reconcile transactions in your bank feed, Xero records the GST component of each transaction and accumulates these figures in the background. By the time you’re ready to prepare your BAS, Xero has already calculated your:

• G1 — Total Sales (your gross income including GST)
• 1A — GST on Sales (the GST you collected)
• 1B — GST on Purchases (the input tax credits you can claim)

This automation dramatically reduces the manual effort of calculating your GST liability and significantly lowers the risk of arithmetic errors.

Connecting to the ATO

Xero connects directly to the ATO, which means you can lodge your BAS straight from within Xero without needing to log into the ATO Business Portal or myGov separately.

If you work with a Xero accountant or registered BAS Agent, they can also access your Xero file directly to review, finalise, and lodge your BAS on your behalf — all without needing to be physically present.

Step-by-Step: How to Prepare Your BAS in Xero

Here’s a practical walkthrough of the BAS preparation process in Xero. Before you start, make sure your bookkeeping is up to date for the period.

Step 1: Review and Reconcile Your Accounts

Before you do anything with your BAS, your bank accounts need to be fully reconciled for the entire BAS period. This means every transaction in your Xero bank feed has been matched or coded.

Step 2: Open the BAS in Xero

Navigate to Accounting > Tax > Activity Statements. Xero will show you the current or upcoming BAS periods. Select the relevant period and open the draft BAS.

Step 3: Check Your GST Amounts

Review the pre-populated figures against what you’d expect based on your income and expenses for the quarter. If anything looks off, drill down into the GST Audit Report to see a transaction-by-transaction breakdown.

Step 4: Finalise and Lodge

Once you’re satisfied the figures are accurate, you have two lodgement options from within Xero: Lodge directly via Xero, or export and lodge manually via the ATO Business Portal or your registered BAS Agent.

Common BAS Mistakes Business Owners Make in Xero

Even with Xero doing much of the calculation work, there are several mistakes that regularly trip up business owners.

Using the Wrong GST Codes

Coding a GST-free sale as a taxable sale, or using “GST (10%)” for a bank charge that should be “BAS Excluded” — these errors compound over time. Take the time to set up your chart of accounts correctly from the start.

Not Reconciling Before Lodging

Lodging a BAS when your bank accounts aren’t fully reconciled is one of the fastest ways to get your figures wrong. Always reconcile fully before opening your BAS in Xero.

Missing or Incorrect PAYG Withholding

If you have employees, you must report the PAYG withholding you’ve deducted from their wages in the W2 field of your BAS.

Claiming GST on Expenses That Are Input Taxed or GST-Free

Not everything you buy has GST on it. Bank fees, some insurance products, wages, and residential rent are common examples of expenses that are either input taxed or GST-free.

BAS Due Dates — When Do You Need to Lodge?

Missing your BAS due date attracts a Failure to Lodge (FTL) penalty from the ATO. Standard quarterly due dates:

• Q1 (July-September): Due 28 October
• Q2 (October-December): Due 28 February
• Q3 (January-March): Due 28 April
• Q4 (April-June): Due 28 July

If you lodge through a registered BAS Agent, you’re typically entitled to extended lodgement deadlines.

Should You Use a BAS Agent?

Many business owners start out lodging their own BAS and do so successfully. But as your business grows, handing your BAS to a registered BAS Agent becomes a smart investment.

At Pinnacle Accounting & Advisory, our lead accountant Mina Baselyous holds CPA, CTA, and Registered BAS Agent credentials. Key benefits of using a registered BAS Agent include extended lodgement deadlines, accuracy review, time savings, ATO representation, and strategic tax planning advice.

If you’re in Melbourne and looking for a registered BAS Agent who works exclusively in Xero, our BAS Agent services page explains exactly how we work and what’s included.

Frequently Asked Questions

Can I lodge my BAS directly from Xero?

Yes. If your Xero organisation is connected to the ATO, you can lodge directly from the Xero Activity Statements screen.

What happens if I make a mistake on a lodged BAS?

For small errors (under $10,000 in GST), you can include the correction in your next BAS. For larger errors, you’ll need to lodge a revised BAS.

Do I need to lodge a BAS if my business made no income?

Yes. Once registered for GST, you must lodge a BAS for every period — even a nil BAS.

How far back can the ATO audit my BAS?

For most businesses, the ATO can review your BAS for up to four years from the date of lodgement. Keep accurate records for at least five years.

Ready to Take the Stress Out of Your BAS?

At Pinnacle Accounting & Advisory, we’re a Melbourne-based, Xero-specialist accounting firm and registered BAS Agent practice. Ready to get your BAS sorted? Book a Consultation with Mina today.

Frequently Asked Questions

• Facebook
• Instagram
• LinkedIn
• YouTube
• TikTok
• X