Q2 BAS is the one most agents quietly dread — December trading, summer holidays, half the bookkeepers on leave, then a hard 28 February deadline. Here's the three things I've had to correct on client files this fortnight.
1. Bank fees coded as GST-free instead of input-taxed
Xero defaults bank fees to GST-free in some chart templates. Bank fees are input-taxed— they're a financial supply, no GST is charged, and they don't belong in the same bucket as council rates or fresh food. The dollars are usually small but the ATO data-matches BAS lodgements against bank feeds, so it draws attention you don't want.
Fix: open your chart of accounts, find Bank Fees, set the default tax rate to BAS Excluded if you want it off the BAS entirely, or to Input Taxed if you want it visible at G14.
2. PAYG instalments paid twice
If you're on quarterly PAYG instalments and you also paid the instalment voluntarily through your MyGov account, the second amount doesn't reduce your BAS liability — it sits on the integrated client account as a credit. I've had three clients this quarter ring me thinking they'd already paid the BAS in full because the running balance looked covered.
Always check the activity statement accountseparately from the integrated client account before lodging. They're two different ledgers.
3. Motor vehicle purchases over the car limit
The car limit for FY26 is $69,674. If your business bought a vehicle over this — common with utes loaded with options — the GST you can claim is capped at 1/11th of the car limit, not 1/11th of the purchase price. The depreciation cost base is also capped.
Three checks before you claim:
- Is it a passenger vehicle (≤9 seats, ≤1 tonne carrying capacity)? Single-cab utes and most commercial vans are exempt — claim full GST.
- If it's capped, is the over-limit GST sitting in the right account? It's not a deduction, it's part of the cost base for depreciation.
- Is it 100% business use? If not, apportion the capped amount, not the full price.
If you're unsure on any of these and your Q2 BAS is open in front of you, send it through and we'll review before you lodge. There's no fee for a 15-minute review on a BAS we end up lodging for you.
