A Complete Guide to BAS Lodgement for Small Businesses: How Payroll Fits In

If you run a small business in Australia, you’ve probably heard about the Business Activity Statement, or BAS. Lodging your BAS is an important part of meeting your tax obligations to the Australian Taxation Office (ATO). It’s how you report things like Goods and Services Tax (GST) and Pay As You Go (PAYG) withholding.

One part of BAS that often gets overlooked is payroll. Payroll isn’t just paying your staff—it also affects how you report and pay your BAS. If payroll isn’t done correctly, your BAS numbers may be wrong, and that can lead to problems with the ATO.

This guide will explain what BAS lodgement is, why it matters, how payroll connects to it, and how small business owners can handle both more smoothly.

What Is BAS Lodgement?

A BAS is a form you send to the ATO to report your business’s tax details for a set period. Depending on your business size and turnover, you might need to lodge your BAS every month, every quarter, or once a year.

The BAS form covers:

• GST collected and paid

• PAYG instalments

• PAYG withholding from wages

• Fringe Benefits Tax (FBT) instalments (if applicable)

If you are registered for GST, you must report how much GST you collected from customers and how much GST you paid on your purchases. If you have employees and withhold tax from their wages, you must also report those amounts on your BAS.

This is where payroll comes in—because the amounts you withhold from your employees’ wages need to be recorded in the BAS.

Why BAS Is Important for Small Businesses

Lodging your BAS correctly and on time is a legal requirement. If you get it wrong or submit it late, the ATO can charge penalties and interest. For small businesses, where every dollar and every deadline matters, this can be a big problem.

BAS lodgement also helps you keep track of your finances. If you know exactly what you owe and when, it’s easier to manage cash flow, plan for expenses, and make smart business decisions.

How Payroll Connects to BAS Lodgement

Payroll affects BAS through the PAYG withholding system. Every time you pay an employee, you are required to keep a portion of their wages and send it to the ATO. This money goes toward the employee’s income tax.

When you lodge your BAS, you must include the total PAYG tax you withheld from all employees during the reporting period. This means your payroll records must be accurate so your BAS report is correct.

Payroll also affects BAS in other ways:

• PAYG Withholding – These amounts come straight from payroll and must be included in your BAS.

• Superannuation – While super isn’t reported on the BAS, payroll records help make sure super payments are accurate and on time.

• Fringe Benefits – If you provide benefits like a company car or certain allowances, these can affect other parts of your BAS.

• Contractor Payments – Employee wages aren’t subject to GST, but if you pay contractors who are registered for GST, those invoices may need to be reported in the GST part of your BAS.
  
  

Common Payroll-Related BAS Mistakes

Some of the most common mistakes small business owners make when lodging their BAS are:

• Miscalculating PAYG withholding and reporting the wrong total
  
  

• Forgetting to include certain staff payments

• Not keeping payroll tax tables up to date

• Mixing up employee and contractor payments, leading to errors in GST reporting

• Not paying super on time, which can cause wider payroll issues that make BAS preparation harder

Even a small payroll error can affect your BAS figures. Over time, these mistakes can lead to ATO reviews or fines.

Tips for Managing Payroll and BAS Together

The best way to make BAS lodgement easier is to have accurate payroll systems. Make sure your payroll software is updated with the latest ATO tax rates, award rates, and super rules. If possible, use software that links payroll directly with BAS reporting so you can pull the correct PAYG figures without extra calculations.

Keep all payroll records organised—things like payslips, employee tax file declarations, and payment summaries should be easy to find. This helps if the ATO asks for more details or if you need to check a figure.

It’s also a good idea to do regular payroll checks—monthly or quarterly—before lodging your BAS. This way, you can find and fix mistakes before they cause bigger issues.

The Role of Single Touch Payroll (STP)

Single Touch Payroll is a system that sends payroll information to the ATO every time you pay employees. This includes wages, PAYG withholding, and superannuation amounts.

STP makes it easier for the ATO to match your BAS figures with their records. While it doesn’t replace BAS lodgement, it does reduce the chance of big differences between what you report in payroll and in your BAS.

BAS Lodgement Dates

How often you lodge your BAS depends on your GST registration and annual turnover:

• Many small businesses lodge quarterly. Deadlines are usually the 28th day after the quarter ends, except for the December quarter, which is due in February.

• If you lodge monthly, the due date is the 21st of the following month.

Keeping payroll and BAS schedules aligned can make deadlines less stressful. If you run payroll in time to finalise figures before the BAS due date, you’re less likely to rush and make mistakes.

Why You Might Need Professional Help

While many small business owners try to manage BAS and payroll themselves, the rules can be tricky. A registered BAS agent or accountant can make sure your payroll numbers are correct, your BAS is lodged on time, and you’re meeting all ATO requirements.

This is especially useful if your business has more complex payroll situations—such as staff under different awards, casual or part-time workers, or fringe benefits. A professional can also help you claim legitimate deductions and manage cash flow better.

Keeping Up with Changes

Tax rules, superannuation rates, and payroll requirements can change. Staying updated helps you avoid mistakes and penalties. You can:

• Sign up for ATO updates

• Attend webinars or training sessions

• Check your payroll software settings regularly to make sure they’re using the latest rates and rules

Also, as your business grows, your BAS and payroll obligations might change. For example, a higher turnover could mean you need to lodge BAS more often. Doing an annual review with a professional is a smart move.

Conclusion

BAS lodgement is a key responsibility for small business owners in Australia. Payroll plays a big part in this process because PAYG withholding from employee wages must be included in your BAS. If your payroll isn’t correct, your BAS won’t be either.

By using reliable payroll systems, keeping good records, checking figures regularly, and getting help when you need it, you can make BAS lodgement much less stressful and more accurate.

If you’d like professional support to handle BAS and payroll so you can focus on running your business, visit Elite Plus Accounting. Their team can help you stay compliant, save time, and keep your business finances in order.