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Your Business Activity Statement (BAS) is a form submitted to the Australian Taxation Office (ATO) by registered businesses to report their GST obligations, Pay As You Go (PAYG) withholding (PAYGW) and Pay As You Go (PAYG) instalments (PAYGI).
Many business owners and their bookkeepers do a good job of preparing and lodging their own BAS, however recording the BAS payment back into the accounts is where things go astray.

When you’re coding a payment or refund for a BAS in your accounting or bookkeeping system, it can get a little tricky, especially if it covers several different areas. Here’s a simplified step-by-step guide for beginners:

1. Understand Your BAS Statement:
   • GST: Goods and Services Tax – You’ll report on your GST collected and GST paid.
   • PAYGW: Pay As You Go Withholding – Taxes withheld from employee wages.
   • PAYGI: Pay As You Go Instalments – Estimated tax payments based on your projected income.
2. Review the Transaction:
   • Determine the nature of the transaction. Is it a payment you’ve made to the ATO or a refund you’ve received from them?
3. Open Your Accounting Software:
   • Most modern accounting software (like Xero, MYOB, QuickBooks, etc.) will have categories or accounts specifically for these tax obligations.
4. Splitting the Transaction:
   • Create a new transaction, and if your software allows for it, choose the option to split it.
   • For each portion of the payment or refund, assign it to the correct account.
     • For example:
       • GST portion goes to the ‘GST Payable’ or ‘GST Receivable’ account.
       • PAYGW portion is assigned to the ‘PAYG Withholding Payable’ account.
       • PAYGI portion is assigned to the ‘PAYG Instalments Payable’ account.
5. Input Amounts:
   • For a payment to the ATO: credit (or decrease) your bank account and debit (or increase) the tax liability accounts.
   • For a refund from the ATO: debit (or increase) your bank account and credit (or decrease) the tax liability/receivable accounts.
6. Enter Descriptions:
   • For clarity, always put a detailed description. For example, “BAS Payment for Q1 2023” or “BAS Refund for Q1 2023”.
7. Check and Double-check:
   • Ensure that your entries align with the figures on the actual BAS. If there’s a discrepancy, you need to figure out why before finalizing.
8. Save and Reconcile:
   • Save your transaction.
   • When you reconcile your bank statement, this transaction should match the corresponding payment or deposit.
   • Look at your balance sheet accounts and check that after entering your payments and receipts that the balance at the end of the period the BAS relates to is correct. This is not always straightforward when the BAS is on a cash basis and the accounts are on an accrual basis requiring analysis of accounts payable and accounts receivable balances… but if you are close that is a good start.
9. Document:
   • Keep a copy of the BAS and any relevant payment or refund documentation in your records. This is vital for any future reference or in case of an audit.
10. Stay Updated:

• • Tax rules and obligations can change. Make sure to keep yourself updated with any changes in the ATO’s regulations, especially as they pertain to BAS.

Remember, each business might have specific nuances or complexities. If you’re ever uncertain, it’s always a good idea to consult with a professional accountant or bookkeeper.