Xero BAS Review Basics

Xero will assemble an activity statement in a few clicks, and that convenience is exactly the risk. The figures on the BAS are nothing more than a summary of how every transaction was coded during the period. Xero totals your coding — it does not check it.

How Xero builds the BAS

The activity statement in Xero is driven by tax rates. Every transaction carrying a GST rate flows into the GST labels, and payroll flows into the wages and withholding labels. When Xero is connected to the ATO, it can display the statements the ATO is expecting and lodge directly once you are ready.

The basis setting shapes everything: whether GST is reported on a cash or accruals basis must match how you are registered with the ATO. If Xero is set to the wrong basis, every BAS is built from the wrong set of transactions, even when each individual transaction is coded perfectly.

The review before lodging

A BAS review is not redoing the bookkeeping; it is looking for the coding that does not belong.

• Run the GST reconciliation report and confirm the GST on the statement agrees with the GST account on the balance sheet — and that you can explain any gap.
• Scan the detailed GST report for lines that look wrong for their tax rate: GST claimed on wages, bank charges, government fees or overseas subscriptions where the supplier did not actually charge it. The tax invoice, not habit, decides.
• Look at what has been coded BAS Excluded. It should be loan movements, drawings and genuinely private items — not sales or purchases someone was unsure about.
• Check for unfiled amounts: transactions dated inside a period you have already lodged, added or edited after the event. Xero can carry these into the current statement so they are reported rather than lost.

Filed means filed in Xero too

Once a BAS is lodged, mark it as filed in Xero, or lodge it through Xero so the status updates itself. This matters more than it looks: Xero uses the filed status to work out which transactions have already been reported, and a pile of unfiled statements makes every future unfiled-amount calculation murky. Record the payment or refund against the right liability accounts rather than to a fresh expense line.

Then lock the period

After lodging, set a lock date at the end of the BAS period. It prevents anyone editing the transactions behind figures that are now sitting with the ATO. When something genuinely needs changing, the correction goes into the current period and is picked up as an unfiled amount on the next statement — visible, rather than silent.

What are unfiled amounts in Xero?

Transactions dated in a period whose BAS was already lodged, but added or changed afterwards. Xero can include them in the current activity statement so the GST is still reported.

Should my Xero GST setting be cash or accruals?

Whichever basis you are registered for with the ATO — they must match. If you are unsure, check your registration before the next BAS rather than guessing.

Why doesn't the GST account on my balance sheet match the BAS?

Usually timing differences between cash and accruals reporting, unfiled amounts, or transactions coded directly to the GST account. The GST reconciliation report is built to explain the gap.