Construction Business Accounting: How to Handle GST and BAS
If you’re running a construction or trades business in Australia, GST and BAS are two obligations you’ll deal with every quarter. Get them right, and they’re just admin. Get them wrong, and you’re looking at ATO penalties, interest charges, and the kind of scrutiny no builder wants on their books.
This guide gives you straight answers. No jargon, just what you need to know, in the right order.
Do you need to register for GST?
Yes, if your annual turnover hits $75,000. That’s the threshold set by the Australian Taxation Office (ATO), and it applies to your total revenue, not your profit.
The part that trips up a lot of builders
Turnover in construction means your total contract value, not what’s left after materials and subcontractors. Take on a $90,000 renovation job and $60,000 goes to materials and subbies — your turnover is still $90,000. You need to be registered for GST. (Source: ATO, Registering for GST)
Once registered, you must:
- Charge GST (10%) on all taxable sales and services
- Issue tax invoices to your clients
- Report and pay GST to the ATO via your BAS
- Claim GST credits (input tax credits) on eligible business purchases
What if you’re under $75,000? You can choose to register voluntarily. If you’re buying significant materials or equipment, voluntary registration lets you claim those input tax credits back, which reduces your real costs. Worth a conversation with your accountant.
What is a BAS and what goes in it?
A Business Activity Statement (BAS) is the form you lodge with the ATO to report and pay various tax obligations. For a construction business, that typically includes:
- GST collected on your sales
- GST credits claimed on your purchases
- PAYG withholding (if you have employees)
- PAYG instalments (income tax paid in advance)
Think of it as your tax scoreboard for the period. GST in minus GST out, plus any PAYG. The net amount is either what you owe the ATO, or what they owe you.
When is BAS due? (2026–27 dates)
Most small and medium construction businesses report GST quarterly if their GST turnover is under $20 million and the ATO has not required them to report monthly. Here are the standard due dates for the 2026–27 financial year.
| Quarter | Period | Standard Due Date | Agent Due Date |
|---|---|---|---|
| Q1 2026-27 | 1 Jul - 30 Sep 2026 | 28 October 2026 | 25 November 2026 |
| Q2 2026-27 | 1 Oct - 31 Dec 2026 | 28 February 2027 | 28 February 2027 |
| Q3 2026-27 | 1 Jan - 31 Mar 2027 | 28 April 2027 | 26 May 2027 |
| Q4 2026-27 | 1 Apr - 30 Jun 2027 | 28 July 2027 | 25 August 2027* |
The ATO’s registered agent program provides additional time for eligible quarterly activity statements lodged electronically. Q2 does not receive an additional agent concession because its standard February deadline already includes an extended lodgment period. The Q4 agent date is subject to confirmation when the ATO finalises the 2027–28 lodgment program.
Note: If a due date falls on a weekend or public holiday, the ATO allows lodgment and payment on the next business day.
Monthly lodgers
Businesses with GST turnover of $20 million or more must generally report and pay GST monthly. Monthly BAS is due on the 21st day of the following month. Businesses below the $20 million threshold may also choose monthly reporting.
Working with a registered BAS agent can give you more time
Eligible quarterly BAS lodged electronically through a registered tax or BAS agent can receive later lodgment and payment dates for Q1, Q3 and Q4. Eligibility conditions apply, so businesses should confirm their specific due date with their agent or through the ATO.
2026–27 Federal Budget update
One relevant change for small businesses is that the Government has made the $20,000 instant asset write-off permanent from 1 July 2026. Eligible small businesses with aggregated turnover of less than $10 million can immediately deduct the business portion of eligible assets costing less than $20,000, subject to the applicable rules.
The Budget also announced changes aimed at making PAYG instalments more flexible, including an option for businesses to move to monthly PAYG instalments from 1 July 2027 and expanded use of the ATO’s dynamic instalments system. These changes begin after the 2026–27 financial year.
Late ATO payments still cost more
General Interest Charge is no longer tax-deductible: GIC and Shortfall Interest Charge incurred on or after 1 July 2025 cannot be claimed as a tax deduction. This makes staying on top of BAS and other ATO payment deadlines even more important, as interest on overdue tax debts can no longer reduce taxable income.
Claiming input tax credits: What can you claim?
Input tax credits (ITCs) are the GST you paid on business purchases, claimed back through your BAS. For construction businesses, eligible claims include:
- Building materials (timber, steel, bricks, plasterboard, concrete)
- Tools and equipment purchases
- Equipment hire
- Fuel for vehicles and machinery used in the business
- Subcontractor invoices where the subbie is registered for GST
- Work-related vehicle costs
To claim an ITC, you need a valid tax invoice from the supplier. That means it clearly shows the supplier’s ABN, the GST amount, and the total price. No valid tax invoice, no credit. Check your invoices before BAS time, not after (Source: ATO, When You Can Claim a GST Credit).
One to watch: subcontractors without an ABN
If a subcontractor doesn’t quote an ABN on their invoice, you must withhold 47% of the payment and remit it to the ATO. This catches a lot of businesses off guard. Always verify ABNs before you pay, using the Australian Business Register at abr.business.gov.au. (Source: gstcalculate.com.au, GST for Construction and Trades)
Residential vs commercial: The GST rules are different
This is where construction GST gets more complex. The rules depend on what you’re building or selling.
Commercial work and new residential construction
All construction services attract 10% GST. If you’re building new residential premises to sell, GST applies to the sale price, and you can claim GST credits on your construction costs (source: ATO, GST and Property).
Selling existing residential property
If residential premises have been rented out continuously for five years or more, they’re not considered ‘new.’ The sale is input-taxed, meaning no GST applies, but you also can’t claim GST credits on related purchase costs.
GST at settlement
Since 1 July 2018, buyers of new residential premises must withhold GST from the contract price and pay it directly to the ATO at settlement. As the builder or developer, the obligation to report the sale on your BAS remains with you. But the cash flow impact is real: you receive the purchase price minus GST at settlement (source: ATO, GST at Settlement).
If you’re a builder who also develops and sells
Talk to your accountant about the margin scheme. It can significantly reduce the GST you pay on property sales, particularly where you bought land without GST.
The Taxable Payments Annual Report (TPAR): Don't overlook this one
If you pay subcontractors for building and construction services, you have an extra annual obligation: the Taxable Payments Annual Report (TPAR).
What is TPAR?
TPAR is an annual report you lodge with the ATO listing every subcontractor you paid during the financial year. It includes their ABN, name, address, and the total gross amount paid including GST.
The ATO uses this data to match what your subbies report in their own tax returns. It’s a compliance tool that catches contractors who underreport income or haven’t registered for GST when they should have.
Who needs to lodge?
Construction businesses are included in the TPAR regime. The ATO applies a 10% threshold test: if 10% or more of your business income comes from building and construction services, you need to lodge.
Key dates
- TPAR for the 2025-26 financial year is due 28 August 2026 (source: ATO, Taxable Payments Annual Report)
- TPAR paper forms are no longer accepted after 28 August 2025. All lodgements must be done electronically
- Xero, MYOB, and QuickBooks all support TPAR lodgement directly
What happens if you miss it?
From 1 July 2026, a penalty unit is $364. Missing your TPAR can cost a small business up to $1,820 in penalties. Beyond the fine, a missed TPAR is a visible compliance flag that can attract ATO attention to the rest of your accounts (source: LINK Books, Taxable Payments Annual Report).
A practical tip
Run a subcontractor payment report in your accounting software at the end of each quarter. It takes five minutes and means you’re never scrambling for ABNs and payment totals in August.
Accounting method: Cash vs accruals
When you lodge your BAS, you report GST using either the cash or accruals accounting method.
- Cash basis: You report GST when money actually moves (payment received or payment made). This is the default for most small businesses and helps with cash flow because you’re not paying GST on invoices you haven’t collected yet.
- Accruals basis: You report GST when the invoice is issued, regardless of when it’s paid. This is more complex but required for businesses with turnover over $10 million.
In construction, where progress billing and long payment cycles are common, cash basis accounting is usually the better fit for smaller operators. It keeps your BAS aligned with your actual cash position.
Common mistakes to avoid
- Not registering for GST on time: You have 21 days to register once your turnover hits the $75,000 threshold. Missing this window can result in penalties and back-payment of GST.
- Paying subcontractors without checking their ABN: If no ABN is quoted, you must withhold 47%. Most builders don’t. That creates a liability.
- Missing BAS due dates: Failure-to-lodge (FTL) penalties start at $330-$364 per 28-day period and escalate. Lodging on time, even if you can’t pay, stops the FTL clock.
- Claiming GST on private or mixed-use expenses: You can only claim the business portion of expenses used partly for personal purposes.
- Forgetting TPAR: It’s separate from your BAS and has its own August deadline. Many construction businesses discover it exists when the ATO writes to them about it.
Frequently Asked Questions
Do I need to register for GST if I'm a sole trader in construction?
Yes, if your turnover is $75,000 or more per year. In construction, turnover means your total contract value, not your take-home after costs. A single $80,000 job puts you over the threshold.
How often do I need to lodge a BAS?
Most small construction businesses lodge quarterly. The standard due dates for 2025-26 are 28 October 2025, 28 February 2026, 28 April 2026, and 28 July 2026. If you use a registered BAS agent, you get an automatic extension of roughly four weeks on most quarters.
Can I claim GST on materials I bought before I registered?
In some cases, yes. You may be able to claim GST credits on purchases made before registration if the goods or services are still on hand when you register and will be used in your GST-registered business. This is called a pre-registration GST credit, and the rules are specific. Talk to your accountant before lodging.
What is TPAR and does it apply to my construction business?
TPAR stands for Taxable Payments Annual Report. If you pay subcontractors for building and construction services, and those payments make up 10% or more of your income, you need to lodge a TPAR by 28 August each year. It lists every subcontractor you paid, including their ABN and total gross amount received.
What happens if I lodge my BAS late?
The ATO applies a Failure to Lodge (FTL) penalty for each 28-day period your BAS is overdue, up to five periods. From 1 July 2026, one penalty unit is $364, so a small business faces up to $1,820 per late BAS. If you also owe money, General Interest Charge (GIC) accrues daily and is no longer tax-deductible as of 1 July 2025.
Elle Green, CA
Elle Green is a Chartered Accountant (CAANZ) and Co-Founder of Acctivate Business Accountants, with over a decade of experience supporting small businesses across taxation and cash flow management. Holding a Bachelor of Commerce and a Xero Advisor certification, Elle is known for translating complex financial concepts into clear, practical guidance for business owners.
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