🇦🇺Australia

GST/BAS & STP Lodgement Errors & ATO Penalties

3 verified sources

Definition

Contractors who cannot clearly prove labour hours by task/cost code struggle to allocate revenue correctly for BAS purposes. Manual spreadsheets merge labour across cost centres, making it impossible to audit which hours were billable, which were non-taxable, and which attracted penalty rates. GST miscalculation and late lodgement attract ATO interest (10% p.a.) and penalties (25–50% of tax debt for dishonest conduct).

Key Findings

  • Financial Impact: AUD 2,000–6,000 per annum in BAS correction costs and interest; STP Phase 2 penalty up to AUD 13,500 per year for non-compliance
  • Frequency: Quarterly (BAS lodgement cycle); ongoing (STP reporting pressure from mid-2026)
  • Root Cause: No clear labour cost coding; timesheets not linked to tax categories; manual BAS reconciliation; no API integration to ATO-compatible accounting software

Why This Matters

The Pitch: Contractors waste AUD 2,000–6,000 annually on BAS corrections, interest charges, and audit costs due to labour classification errors. STP Phase 2 non-compliance carries penalties up to AUD 13,500 per failure. Integrated time-tracking + accounting software ensures correct tax allocation automatically and eliminates STP lodgement risk.

Affected Stakeholders

Accountants/tax advisors, Finance managers, Business owners (penalty liability)

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Unbilled Labour Hours & Time Theft

AUD 2,000–6,000 per employee annually; 5–15% of billable labour hours lost to time theft or underreporting

Manual Payroll Processing & Reconciliation Delays

AUD 3,000–8,000 per month (payroll admin overhead); 20–40 hours per month of manual rework

Superannuation Guarantee Shortfall & SG Charge

AUD 5,000–15,000 per annum in SGC exposure; penalty is 200% of shortfall plus 10% interest

Manual Timesheet Approval Bottlenecks & Payroll Delays

AUD 8,000–15,000 per annum in lost payroll productivity; 2–4 working days delayed per payroll cycle

Unbilled Change Order Work Due to Incomplete Documentation

Estimated 2-5% of contract value per change order; typical commercial fit-out project: AUD $50,000-$150,000 in unbilled work per year

Delayed Change Order Approval and Payment Hold-Up

15-30 day payment delay per change order; interest cost @ 6% p.a. on average AUD $300,000 WIP = ~AUD $5,000/month opportunity cost for mid-sized contractor

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