If you run an arborist business in Australia, your Business Activity Statement (BAS) is one of the most important compliance obligations you face. Whether you are a sole trader removing a single storm-damaged gum tree or managing a crew of ten across multiple council contracts, the Australian Taxation Office (ATO) expects your BAS to be accurate, complete, and lodged on time – every single quarter.
Yet BAS lodgement for arborists comes with its own set of challenges. The mix of cash and card payments, subcontractor arrangements, equipment purchases, fuel costs, and seasonal fluctuations in work volume makes it easy for errors to creep in. A small mistake on one BAS can snowball into penalties, interest charges, and – in worst-case scenarios – an ATO audit.
This guide walks you through everything you need to know about BAS lodgement as an arborist business owner: the deadlines you must meet, the most common mistakes we see in the industry, and the practical systems you can put in place to make BAS time straightforward rather than stressful. If you would like personalised guidance on your tax compliance obligations, we are here to help.
What Is a BAS and Why Arborists Need to Get It Right
A Business Activity Statement is a form you submit to the ATO to report and pay several tax obligations, including Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, and PAYG income tax instalments. If your arborist business is registered for GST – which is mandatory once your annual turnover reaches $75,000 – you must lodge a BAS.
For most arborist businesses, the BAS is lodged quarterly. It is the mechanism through which you: For a step-by-step walkthrough, see our BAS preparation guide for tree services.
- Report the GST you have collected on tree removal, pruning, stump grinding, consultancy reports, and any other taxable services you provide.
- Claim back the GST you have paid on business expenses such as chainsaws, woodchippers, fuel, safety equipment, insurance, and vehicle costs.
- Report PAYG withholding – the tax you have withheld from wages paid to your employees.
- Pay PAYG income tax instalments – prepayments towards your own (or your company’s) expected income tax liability for the year.
Why It Matters for Arborists Specifically
Arborist businesses operate in an environment that the ATO monitors closely. The tree services industry involves a significant amount of cash work, subcontractor arrangements, and asset-heavy operations – all of which are areas the ATO has flagged as higher risk for non-compliance.
Getting your BAS right is not just about avoiding penalties. It also gives you an accurate picture of your business’s financial position. If your BAS figures are wrong, your profit-and-loss reports are wrong, your cash flow forecasts are unreliable, and your end-of-year tax return may trigger ATO scrutiny.
BAS Deadlines and Penalties for Late Lodgement
Quarterly BAS Due Dates
Most arborist businesses lodge their BAS quarterly. The ATO sets fixed deadlines for each quarter. If you lodge through a registered tax agent or BAS agent, you may be eligible for extended due dates – but you must have engaged the agent before the original due date.
| Quarter | Period Covered | Due Date (Self-Lodgement) | Due Date (Via Tax Agent)* |
|---|---|---|---|
| Q1 | 1 July – 30 September | 28 October | Typically late November |
| Q2 | 1 October – 31 December | 28 February | Typically late March |
| Q3 | 1 January – 31 March | 28 April | Typically late May |
| Q4 | 1 April – 30 June | 28 July | Typically late August |
Tax agent due dates vary each year and are set by the ATO. Confirm exact dates with your accountant.
If the due date falls on a weekend or public holiday, the deadline moves to the next business day.
What Happens If You Lodge Late
The ATO takes late lodgement seriously. If you miss your BAS deadline, you may face:
- Failure to lodge (FTL) penalty: The ATO can impose a penalty of one penalty unit for each period of 28 days (or part thereof) that the BAS is overdue, up to a maximum of five penalty units. As of 2025-26, one penalty unit is $330 for individuals and $1,650 for companies. That means a company could face up to $8,250 in penalties for a single overdue BAS.
- General interest charge (GIC): If you owe money on the BAS and pay late, the ATO charges interest on the outstanding amount. The GIC rate is updated quarterly and compounds daily. Even a few weeks of late payment can add hundreds of dollars to your bill.
The ATO may remit penalties in certain circumstances – for example, if it is your first offence and you have an otherwise clean compliance history. However, relying on remission is not a strategy. The simplest approach is to lodge on time, every time.
For the most current information on penalties and interest charges, refer to the ATO’s page on penalties for failing to lodge on time.
What You Need to Report on Your BAS
Your BAS can cover several different tax obligations depending on how your arborist business is set up and what you are registered for. Here are the three main components.
GST (Goods and Services Tax)
If your arborist business is registered for GST, you need to report:
- GST on sales (1A): The total GST you have collected from customers. For example, if you invoice a customer $2,200 (including GST) for tree removal, $200 of that is GST and must be reported.
- GST on purchases (1B): The total GST you have paid on business expenses. If you buy a new chainsaw for $1,100 (including GST), you can claim back the $100 GST component.
- Total sales (G1): Your total sales for the period, including GST-free sales.
- GST-free sales (G3): Any sales that are GST-free (uncommon for most arborist work, but may apply if you export timber products or provide services to certain exempt entities).
The difference between GST collected and GST paid determines whether you owe the ATO money or are entitled to a refund.
Practical example: Say your arborist business completes $110,000 (GST-inclusive) in tree services during a quarter. That means you have collected $10,000 in GST. During the same quarter, you spent $33,000 (GST-inclusive) on fuel, equipment repairs, insurance, subcontractors, and other business costs – meaning you paid $3,000 in GST on purchases. You would owe the ATO $7,000 in net GST for that quarter.
PAYG Withholding
If you employ staff – climbers, ground crew, administrative staff – you are required to withhold tax from their wages and report this on your BAS. The amount you withhold depends on each employee’s tax file number declaration and the ATO’s withholding tax tables.
Practical example: You employ two full-time climbers, each earning $1,400 per week gross. Based on the ATO tax tables, you withhold approximately $250 per week from each employee. Over a 13-week quarter, that is $6,500 in total PAYG withholding to report on your BAS.
Note that PAYG withholding applies to employees, not subcontractors. However, if a subcontractor does not provide you with their ABN, you must withhold 47% from their payment – a situation that is entirely avoidable if you collect ABNs upfront.
PAYG Income Tax Instalments
PAYG instalments are prepayments towards your (or your company’s) own income tax liability. The ATO will notify you if you need to pay PAYG instalments, typically once your business income exceeds a certain threshold.
You can choose to pay either:
- A fixed instalment amount calculated by the ATO based on your most recent tax return, or
- An instalment amount you calculate yourself based on your actual income for the quarter, using the ATO-provided instalment rate.
For arborist businesses with fluctuating seasonal income, calculating your own instalment can sometimes be advantageous – for instance, if you have a quiet winter quarter, you can pay a lower instalment that reflects your actual earnings rather than the ATO’s annualised estimate.
Common BAS Mistakes Arborists Make
Over the years, we have seen the same BAS errors come up repeatedly across arborist businesses. Here are the ones that cause the most trouble.
1. Mixing Personal and Business Expenses
This is the single most common issue we encounter. When the same vehicle is used to tow a chipper to a job site on Monday and drive the kids to school on Tuesday, it is easy for personal expenses to end up in the business accounts – and for GST to be incorrectly claimed on those expenses.
Common examples include:
- Claiming 100% of fuel costs when a vehicle is used partly for personal purposes.
- Running personal purchases through the business account (hardware store trips that include both business and personal items).
- Claiming GST on private health insurance, personal phone plans, or home groceries.
The fix: Maintain a separate business bank account and business credit card. If an expense is partly personal, only claim the business portion. For motor vehicles, keep a logbook for at least 12 continuous weeks to establish your business-use percentage, or use the ATO’s cents-per-kilometre method if applicable.
2. Not Reporting Cash Jobs
Whether it is a neighbour who pays $500 cash for a tree removal or a small job paid via bank transfer without a formal invoice, all income must be reported. The ATO uses increasingly sophisticated data-matching programs to identify discrepancies between reported income and lifestyle indicators. They also match data from banks, suppliers, and council permits.
If you are doing tree work and receiving payment – in any form – it is assessable income and the GST component must be reported on your BAS.
3. Claiming GST on GST-Free or Input-Taxed Items
Not everything you purchase includes GST, and you cannot claim GST credits on items that are GST-free or input-taxed. Common errors include:
- Insurance: Some insurance premiums include stamp duty, which does not have a GST component. You can only claim GST on the base premium plus any fire services levy that includes GST. Check the insurer’s tax invoice carefully.
- Council fees and permits: Many council fees are GST-free. If you pay for a tree removal permit, check whether GST was actually charged before claiming it.
- Interest and bank fees: Financial supplies such as loan interest and certain bank fees are input-taxed, meaning there is no GST to claim.
- Wages and superannuation: These are not subject to GST and should never appear as GST-claimable expenses.
4. Getting the Subcontractor vs Employee Classification Wrong
This is a persistent issue in the arborist industry. If someone works regular hours, uses your equipment, and you control how and when they do their work, they may be an employee – not a subcontractor – regardless of what your agreement says. Misclassifying an employee as a subcontractor means you are not withholding PAYG tax, not paying superannuation, and potentially not meeting workers’ compensation obligations.
The ATO and the Fair Work Ombudsman both scrutinise this area. If they determine that your “subcontractor” is actually an employee, you could face back-payment of PAYG withholding, superannuation guarantee charges, and penalties.
5. Failing to Reconcile Before Lodging
Lodging a BAS without first reconciling your bank accounts, accounts receivable, and accounts payable is a recipe for errors. Unreconciled transactions mean your BAS figures do not match reality – and the ATO will eventually notice the discrepancy, often at the worst possible time.
6. Incorrectly Reporting Asset Purchases
When you buy a major piece of equipment – a new woodchipper for $55,000 (GST-inclusive), for example – the full $5,000 GST credit is claimed on the BAS for the quarter in which you make the purchase. However, the equipment itself is a capital asset, not an operating expense. Some business owners confuse the BAS treatment with the income tax treatment (depreciation), leading to errors in their accounting records.
How to Set Up Systems to Make BAS Easy
The best way to avoid BAS stress is to build good systems from the start. Here is what we recommend for arborist businesses.
Use Cloud Accounting Software
If you are still using spreadsheets or a shoebox of receipts, it is time to upgrade. Cloud accounting platforms such as Xero and QuickBooks Online are purpose-built for Australian small businesses and integrate directly with the ATO.
Key benefits for arborists:
- Bank feeds: Your business bank account and credit card transactions are automatically imported, so you do not have to enter them manually.
- GST coding: Once you set up your chart of accounts correctly, the software automatically calculates GST on each transaction. You can mark items as GST-free or input-taxed as needed.
- BAS preparation: Both Xero and QuickBooks generate a draft BAS based on your coded transactions. You (or your accountant) review it, make any adjustments, and lodge – either through the software or via the ATO’s online portal.
- Receipt capture: Both platforms offer mobile apps that let you photograph receipts on the job site and attach them to transactions. No more lost dockets from the fuel station.
Reconcile Weekly, Not Quarterly
Do not leave bank reconciliation until BAS time. Set aside 15 – 20 minutes each week to reconcile your transactions. This catches errors early, keeps your records current, and means that when BAS time arrives, most of the work is already done.
Separate Your Business and Personal Finances
This cannot be overstated. Open a dedicated business bank account and a business credit card. Run every business transaction through those accounts and nothing else. This makes bank reconciliation faster, reduces errors, and creates a clear audit trail.
Keep a Digital Record of Every Invoice
The ATO requires you to keep records for five years. For arborist businesses, this means every invoice you issue, every receipt for equipment, fuel, and supplies, and every subcontractor agreement. Cloud accounting software handles most of this automatically, but ensure your records are backed up.
Work With a BAS Agent or Accountant
Even if you handle day-to-day bookkeeping yourself, having a registered BAS agent or accountant review and lodge your BAS is a worthwhile investment. They will catch errors you might miss, ensure you are claiming everything you are entitled to, and – importantly – give you access to the extended lodgement deadlines available through the tax agent lodgement program.
If you are looking for an accountant who understands the arborist industry, get in touch with us to discuss how we can help.
When to Lodge Monthly vs Quarterly
Most arborist businesses lodge their BAS quarterly, but there are situations where monthly lodgement may apply or be beneficial.
When Monthly Lodgement Is Required
You must lodge monthly if:
- Your GST turnover is $20 million or more (unlikely for most arborist businesses, but applicable if you are part of a larger group).
- The ATO has directed you to lodge monthly due to compliance concerns.
When Monthly Lodgement May Be Beneficial
Some businesses voluntarily elect to lodge monthly. This can make sense if:
- You are regularly in a GST refund position. If your business purchases (and their GST component) consistently exceed your GST collected – for example, during a period of heavy equipment investment – monthly lodgement gets your refund back faster. Waiting three months for a $15,000 GST refund when you could receive portions of it monthly can put unnecessary strain on cash flow.
- You prefer smaller, more frequent payments. Some business owners find it easier to manage cash flow with 12 smaller payments rather than four larger ones.
- You want tighter financial control. Monthly BAS preparation forces you to keep your records up to date and gives you a more current view of your financial position.
The Trade-Off
Monthly lodgement means more frequent paperwork and more deadlines to manage. For most small-to-medium arborist businesses, quarterly lodgement strikes the right balance between compliance effort and cash flow management. If you are unsure which option suits your business, your accountant can help you weigh up the pros and cons based on your specific circumstances.
What Happens If the ATO Contacts You About a BAS Error
Receiving a letter or phone call from the ATO can be unsettling, but it is not always cause for alarm. Here is what to expect and how to handle it.
Common Reasons the ATO May Contact You
- Data-matching discrepancy: The ATO matches your BAS data against information from banks, suppliers, customers, and other government agencies. If something does not line up – for instance, your reported income is significantly lower than the payments received into your business bank account – they will ask questions.
- Amended assessment: If the ATO believes your BAS contained an error, they may issue an amended assessment, adjusting the amount of GST or PAYG you owe.
- Review or audit: In more serious cases, the ATO may initiate a formal review or audit. This could involve requests for detailed records, interviews, and on-site visits.
- Benchmarking outlier: The ATO publishes industry benchmarks for various business types. If your reported figures fall well outside the expected range for an arborist business of your size – for example, unusually low income relative to the number of employees – this can trigger a review.
How to Respond
- Do not ignore it. Whether it is a letter, phone call, or message in your myGov inbox, respond promptly. Ignoring ATO correspondence only escalates the situation.
- Contact your accountant immediately. Do not try to handle an ATO review on your own, especially if it involves potential penalties or back-payments. Your accountant can communicate with the ATO on your behalf, provide context, and negotiate outcomes.
- Gather your records. Pull together all relevant invoices, bank statements, receipts, and BAS working papers for the period in question. Well-organised records are your best defence.
- Be honest and cooperative. If a genuine mistake was made, acknowledge it. The ATO is generally more lenient with businesses that are upfront about errors and take steps to correct them. Attempting to cover up a mistake will make things significantly worse.
- Correct the error. If the BAS contained a mistake, you can lodge a revised BAS for the affected period. Your accountant can help you do this correctly and manage any resulting payment obligations.
For more information on what to expect during an ATO review, visit the ATO’s page on audits and reviews.
Building Good BAS Habits: A Quarterly Checklist for Arborists
To keep your BAS lodgement on track, work through this checklist each quarter:
- Week 1 of the new quarter: Reconcile all bank accounts and credit cards for the previous quarter. Ensure every transaction is coded correctly.
- Check outstanding invoices: Follow up on any unpaid invoices. For cash-basis reporting, you only report GST on payments you have actually received and made – but you still need to know what is outstanding.
- Review GST coding: Scan your expense transactions for the quarter. Are there any items incorrectly coded as GST-inclusive that should be GST-free (such as council permits, bank fees, or wages)?
- Verify PAYG withholding: Cross-check the total PAYG withholding on your BAS against your payroll records. These figures must match.
- Review subcontractor payments: Ensure you have a valid ABN on file for every subcontractor you have paid. If you paid anyone without an ABN, you should have withheld 47% and this needs to be reported.
- Check asset purchases: If you bought any major equipment during the quarter, confirm the GST credit has been claimed correctly and the asset has been recorded in your fixed asset register.
- Prepare and review the draft BAS: Generate the BAS from your accounting software. Review the figures against your expectations – do they look reasonable given the volume of work you completed?
- Lodge and pay on time: Lodge your BAS and pay any amount owing before the deadline. If you cannot pay in full, lodge on time anyway and contact the ATO to arrange a payment plan. Lodging on time avoids the FTL penalty even if you cannot pay immediately.
Frequently Asked Questions
Do I need to lodge a BAS if my arborist business earns less than $75,000 per year?
If your annual GST turnover is below $75,000, you are not required to register for GST – and therefore not required to lodge a BAS for GST purposes. However, if you have employees, you will still need to report PAYG withholding, which is done through the BAS (or an instalment activity statement). If the ATO has notified you that you need to pay PAYG income tax instalments, these are also reported via the BAS. In short, even if you are not GST-registered, you may still have BAS obligations depending on your circumstances.
Can I claim GST on a vehicle I use for both personal and business purposes?
Yes, but only on the business-use portion. If you purchase a ute for $66,000 (GST-inclusive) and your logbook shows 75% business use, you can claim 75% of the GST – that is, $4,500 of the $6,000 GST component. You need to maintain a valid logbook to substantiate the business-use percentage. Note that the luxury car tax threshold also affects GST claims on vehicles above a certain value – check with your accountant for current thresholds.
What is the difference between cash and accrual reporting for BAS?
Under cash reporting, you report GST when you actually receive payment from customers and when you actually pay your suppliers. Under accrual reporting, you report GST when you issue an invoice (regardless of when you get paid) and when you receive a supplier invoice (regardless of when you pay it). Most small arborist businesses with turnover under $10 million can choose either method. Cash reporting is often simpler and better for cash flow, as you do not have to pay GST on invoices your customers have not yet paid.
What should I do if I realise I made an error on a previously lodged BAS?
If you discover an error on a BAS you have already lodged, you can correct it by revising the original BAS or by making an adjustment on your next BAS – provided the error meets certain criteria. For GST errors, the ATO allows you to correct mistakes on your next BAS if the net error is less than $10,000 (or does not exceed a certain percentage of your GST liability for the period). For larger errors, or errors relating to PAYG, you will generally need to lodge a revised BAS. In either case, it is best to discuss the correction with your accountant to ensure it is handled properly.
How long does the ATO take to process a BAS refund?
If your BAS shows a refund – for example, because your GST on purchases exceeded your GST on sales – the ATO typically processes electronic lodgements within 14 business days. However, processing can take longer if the ATO selects your BAS for review, if there are errors or inconsistencies in the lodgement, or if your business has outstanding lodgement obligations. Lodging electronically through your accounting software or a tax agent generally results in faster processing than paper lodgement.
Take Control of Your BAS Obligations
BAS lodgement does not have to be a source of stress for your arborist business. With the right systems, a clear understanding of your obligations, and professional support when you need it, you can stay compliant, avoid penalties, and maintain a clear picture of your business finances.
If you are unsure whether your current approach to BAS is serving your business well, or if you have fallen behind and need help getting back on track, we work exclusively with arborists and understand the specific challenges your business faces.
Check how your business stacks up with our free benchmarking tool, or book a free consultation with our team to discuss your BAS and tax compliance needs. We will help you build a system that keeps the ATO happy and lets you focus on what you do best – looking after trees.
Need expert help with tax compliance? Explore our tax compliance services for arborists to stay on top of ATO obligations and maximise your deductions.
Related Reading
- Why Arborists Get Hit with ATO Penalties (And How to Stay Safe in 2026)
- GST/VAT set-aside planner for tree work
- Bookkeeping for Arborists: Why Xero or QuickBooks Isn’t Enough Without Setup Support
Talk to a specialist arborist accountant
Arbour Advisory works exclusively with arborists, tree loppers and tree care businesses across Australia. Book a free, no-obligation consultation to talk through your tax, bookkeeping, equipment finance or growth questions.
