Your bookkeeper finds a BAS mistake. How do you pay the difference and keep trading?
Updated: 1 day ago
A BAS mistake needs two connected plans: the right tax correction and a payment timetable your business can support while continuing to trade.
You have been quoting work, answering customers and keeping the roster covered. Then your bookkeeper calls. A reconciliation has picked up GST coded incorrectly across earlier reporting periods, and your accountant needs to check whether the business owes more.
That is a problem to work through, without assuming the error was deliberate or that borrowing is the answer. In Australia, your registered tax or BAS agent should establish the liability and correction process. You can then work out how to meet it alongside wages, suppliers and the next tax bill.
The short answer
Confirm the affected transactions, reporting periods and additional liability.
Ask your registered agent which correction process applies.
Put the confirmed amount and payment dates into a cash flow forecast.
Compare available cash, collection improvements, an ATO payment arrangement and suitable finance.
Check that future tax and trading bills still fit after any repayments.
The objective is to resolve the past error without creating a fresh shortfall next month.
First, establish what the BAS mistake actually changes
A coding issue in the accounts is a starting point for investigation. It does not, by itself, tell you the final amount payable or which BAS needs attention.
Give your adviser the original invoices, reconciliations, lodged statements and any correspondence about the relevant periods. Ask for a written explanation of the error, the periods affected and the calculation. Keep the original records and an explanation of subsequent changes so another person can follow what happened.
Check who will do the tax work. A bookkeeper may identify the problem, but their professional title alone does not establish their registration or scope. Use a registered tax or BAS agent whose permitted services cover the issue, and confirm they have the appropriate authority to act. The Tax Practitioners Board explains how to find and use a practitioner, including checking registration conditions and agreeing the work to be done.
Your finance broker can assess funding. They should work from the liability and process confirmed by the tax professional rather than deciding the GST treatment.
Can the error go into your next BAS?
Sometimes, but there is no blanket rule allowing every earlier mistake to be carried into the next reporting period.
The ATO allows some GST errors to be corrected on a later BAS where its conditions are met. Those conditions depend on the type of error and can include time limits, debit error value limits and whether the error has already been corrected. Your adviser should check the current GST correction guidance against the actual facts.
A review or examination can affect the available process. If the ATO has contacted you about a relevant period or matter, give that correspondence to your adviser before they proceed. The ATO's activity statement voluntary disclosure guidance explains the significance of an existing review and when the reviewing officer must be contacted.
Ask your agent whether the correct approach is a later BAS correction, a revision of an earlier statement or another disclosure process. Also ask them to confirm any payment consequences and whether interest or penalties need to be considered. Do not build the budget around an assumed remission.
Find the cash gap before choosing how to pay
The additional liability and the amount you need to fund may be different.
Start with cash actually available today, then map expected receipts and commitments by date. A 13-week cash flow forecast helps show whether the pressure lasts a fortnight or continues across several reporting cycles. Use realistic customer payment dates, rather than assuming every invoice will arrive on its due date.
Include wages, superannuation, rent, supplier payments, existing loan repayments and upcoming tax obligations. Add stock purchases needed to deliver work already accepted. Money required to finish a job is not spare simply because it is sitting in the account this morning.
Keep profit separate from available cash. The explanation of why a profitable business can still be short of cash is useful when a healthy sales report seems inconsistent with the account balance. Unpaid invoices cannot make this week's payment until the money arrives.
Run a second version with a major receipt delayed. If the plan fails immediately, revise the proposed payment or funding structure before committing.
Compare the practical payment options
Use available cash without exhausting trading funds
Paying from reserves may be workable if the forecast still leaves enough to operate. Decide what cash must remain available for the next trading cycle and test the proposed payment against that amount.
Look for receipts you can bring forward through accurate invoicing, prompt follow-up and resolving customer disputes. The guide to improving cash flow before borrowing covers practical changes. Avoid counting an unconfirmed customer promise as money already received.
Discuss an ATO payment arrangement
If you cannot pay by the required date, speak with the ATO or your authorised agent about the available options. A payment arrangement may spread the liability into instalments, subject to eligibility and the ATO's assessment.
The ATO's payment plan guidance says tax debts on plans generally continue to accrue general interest charge. Do not assume an arrangement is interest free or that the terms you propose will be accepted. You also need to keep meeting other lodgment and payment obligations.
Build instalments around the cash the business can reasonably produce. If a plan becomes unaffordable, raise that promptly instead of waiting for the next missed payment.
Assess finance against a clear repayment source
Finance may be worth investigating where the corrected liability creates a defined gap and the business can support repayments. It adds another commitment, so identify which future receipts will repay it and what remains after ordinary operating costs.
Compare the total dollars payable, fees, repayment frequency, security requirements and conditions. The guide to working capital loan costs explains why the headline interest rate is only part of that comparison.
If the forecast shows recurring shortages even after collections improve, pause for a broader review. The discussion of when borrowing may not solve a cash flow problem can help frame that conversation with your accountant.
A checklist for the next conversation
Take these questions to your accountant or registered agent before finalising a payment decision:
What is the confirmed additional liability, and what remains an estimate?
Which reporting periods and correction process are involved?
What are the relevant lodgment and payment dates?
Are interest, penalties or adviser costs still to be confirmed?
How much can the business pay while meeting its other commitments?
What changes will prevent the same error continuing?
Assign someone to maintain the forecast and compare actual receipts with expected receipts each week. A plan becomes more useful when changes reach the adviser early.
Keep the next BAS out of the same cycle
Correct the process as well as the historical figures. Ask your adviser what review is appropriate for the issue found, particularly where a repeated coding setting may affect new transactions.
Agree who checks reconciliations, investigates unusual entries and reviews the figures before lodgment. Give those tasks a place in the working week so they do not rely on someone remembering during a busy Friday afternoon.
Set aside money for upcoming obligations using amounts and timing discussed with your accountant. The ATO's small business support guidance recommends setting aside GST, PAYG withholding and superannuation funds. A separate account may help make those commitments visible, provided the amounts are reviewed as trading changes.
Frequently asked questions
Does finding a BAS mistake mean the business has done something deliberately wrong?
No. A mistake can arise from coding, reporting or reconciliation errors. Have your registered agent establish the facts and appropriate correction, without making assumptions about the cause or outcome.
Can my bookkeeper correct it for me?
That depends on their registration, permitted services and authority to act. A registered BAS or tax agent can undertake relevant services within their scope. Check the TPB register and agree who handles the correction.
Should I borrow immediately to cover the difference?
Confirm the amount and timing first. Then compare realistic cash improvements, available reserves, any payment arrangement and finance. Borrowing requires a credible repayment source alongside future tax and operating bills.
Make the payment plan fit the trading business
Start with a verified liability, choose the correct tax process and test the payment timetable against dated cash receipts. A workable response clears the error while leaving the business able to meet the obligations that come next.
Need to plan cash flow around a corrected tax bill?
Fairlane Finance can help you assess a confirmed funding gap and compare finance structures alongside the payment options discussed with your registered tax or BAS agent.
General information only. This article does not constitute financial, credit, legal, tax, accounting, compliance or valuation advice. Finance is subject to lender approval, eligibility criteria, terms, fees and conditions. Consider obtaining independent professional advice for your circumstances before acting.
