Business Activity Statements (BAS) are a regular obligation for GST-registered businesses in Australia. While most businesses default to quarterly reporting, monthly BAS lodgment may offer advantages depending on your circumstances. Understanding the differences helps you make an informed decision that aligns with your cash flow and administrative capacity.
Quarterly BAS: The Default Option
Quarterly reporting is the standard arrangement for Australian businesses with annual GST turnover under $20 million. Lodgments are due on the 28th of the month following the end of each quarter, or the 25th for electronic lodgments through a registered tax agent.
Advantages:
Reduced administrative burden – only four BAS lodgments per year
Better cash flow for businesses that collect GST but do not immediately remit it to the ATO
Lower compliance costs if you engage a bookkeeper or accountant
Time to accumulate funds for GST payment, reducing cash flow pressure
Considerations:
Delayed visibility of your tax position each quarter
Larger payment amounts at each lodgment can create cash flow shocks
Less frequent reconciliation means errors may go undetected longer
Quarterly reporting suits businesses with stable cash flow, simple transactions, and those that prefer to minimize administrative tasks. If you have a seasonal business or irregular income patterns, the quarterly schedule may align well with your natural business cycles.
Monthly BAS: Accelerated Reporting
Monthly BAS reporting is mandatory for businesses with annual GST turnover of $20 million or more. However, smaller businesses can elect to report monthly if they prefer.
Advantages:
Improved cash flow management by spreading GST payments across the year
Earlier refunds if your business claims more GST credits than it owes
Better financial visibility with monthly reconciliation of transactions
Smaller payment amounts that are easier to budget for
Early detection of errors or discrepancies in your accounting
Considerations:
Increased administrative burden – twelve lodgments per year
Higher compliance costs if you outsource BAS preparation
Faster remittance of GST to the ATO, which may impact cash flow if you rely on holding GST funds
Monthly reporting particularly benefits businesses that consistently receive GST refunds. Tradespeople purchasing significant materials, retail businesses with high input costs, and startups with substantial setup expenses often find monthly reporting improves their cash position.
How to Change Your Reporting Cycle
If you are currently on quarterly reporting and wish to switch to monthly, or vice versa, you can request a change through the ATO. For voluntary monthly reporting, you simply notify the ATO of your election. To return to quarterly reporting, you must request the change, and the ATO will generally approve if your GST turnover is below the threshold.
Changes typically take effect from the start of a quarter, so plan your transition timing to avoid complications. Consult your accountant before changing cycles to understand the cash flow implications.
Cash Flow Considerations
The key factor in choosing between monthly and quarterly BAS is cash flow timing. Consider these scenarios:
When monthly reporting helps:
You consistently claim more GST credits than you collect (refund position)
You have tight cash flow and need refunds faster to fund operations
You prefer smaller, predictable payments rather than larger quarterly amounts
Your business has rapid growth and you want closer monitoring of tax obligations
When quarterly reporting suits:
You collect more GST than you claim and use the funds for working capital
You have simple transactions and low GST volumes
You want to minimize administrative tasks and compliance costs
Your cash flow is stable and you can manage larger quarterly payments
Single Touch Payroll and PAYG Withholding
Regardless of your GST reporting cycle, employers must report Single Touch Payroll data every payday. If you withhold PAYG from employee wages, this is included in your BAS. Monthly reporting businesses include PAYG withholding in their monthly BAS, while quarterly reporters include it in quarterly BAS.
Some businesses with substantial PAYG withholding obligations may prefer monthly reporting to avoid large quarterly PAYG payments, even if their GST position is neutral.
Making the Decision
To determine the right cycle for your business:
Analyze your GST position – are you typically in a payable or refundable position?
Review your cash flow patterns – when do you receive income and when are major expenses due?
Consider your administrative capacity – can you manage monthly reconciliations?
Calculate the cost difference – factor in bookkeeping or accounting fees
Consult your tax advisor – understand the broader implications for your business
Unsure which BAS reporting cycle suits your business? At Lloyd & Co Accountants in Hawthorn, we help Melbourne businesses analyze their cash flow and choose the most advantageous BAS arrangement. Contact us to review your situation and optimize your tax reporting strategy.
