For an Australian MSP, the quarterly Business Activity Statement (BAS) is the consolidation of three months of GST, PAYG withholding (if you have employees), and PAYG instalments into a single lodgement to the Australian Taxation Office. If ConnectWise is your operational system of record and Xero is your accounting platform, a clean BAS-prep routine runs in roughly 90 minutes per quarter: 45 minutes to close the third month, 10 minutes to run the Xero GST report, 15 minutes to reconcile to ConnectWise, and 20 minutes to lodge the BAS itself.

The BAS-prep routine in 90 minutes per quarter

The routine assumes you are running a working ConnectWise to Xero sync. If you are not, the BAS-prep takes longer because GST is recomputed by hand from CSV exports, not because BAS itself is harder.

The four stages, in order, are: close the quarter, run the Xero GST report, reconcile to ConnectWise, then lodge BAS.

Stage 1: close the quarter (45 minutes)

Close the third month of the quarter using your standard month-end routine. If your MSP runs the six-step close (invoice tie-out, agreement billing, time entries, expenses, GST recalc, P&L variance), the BAS-prep starts from a clean Xero P&L for the quarter. The detail on the close is in our companion article on the MSP month-end close in 30 minutes.

For BAS purposes, the close must include:

  • Every ConnectWise invoice for the quarter posted to Xero with the correct GST treatment per line item.
  • Every agreement that should have billed has billed (the most common BAS-quarter mistake is missing an agreement invoice).
  • Every supplier bill or expense for the quarter recorded in Xero with the correct GST treatment.
  • Bank reconciliation up to and including the last day of the quarter, so any unposted GST does not creep into the next quarter.

Stage 2: run the Xero GST report (10 minutes)

In Xero, open Accounting, Reports, GST Return (or Activity Statement, depending on your Xero region setup). Run it for the quarter (1 Jul to 30 Sep for Q1, and so on). The report shows GST on sales, GST on purchases, and the net GST payable or refundable.

The Xero report is the source of truth for the GST figures on your BAS. If you have set up Xero's BAS lodgement direct to the ATO via SBR (Standard Business Reporting), the report is what you lodge. If you lodge via myGov for Business or via a BAS agent, the report is what you copy onto the BAS form.

Cross-check three numbers against your expectation:

  • GST on sales should match roughly 1/11th of your total invoiced amount for the quarter, on the assumption all sales are GST-applicable. A material variance below that ratio means you have invoices coded as GST-free that should be GST-applicable (or vice versa).
  • GST on purchases should match roughly 1/11th of your total supplier bills for the quarter, on the same assumption. The variance here is usually overseas supplier invoices that are GST-free.
  • Net GST payable equals GST on sales minus GST on purchases. If you are GST-positive (which most MSPs are), this is the cash you owe the ATO at the end of the BAS cycle.

The ATO GST guidance lists the GST treatment rules for different types of supply (ATO, accessed 24 May 2026).

Stage 3: reconcile to ConnectWise (15 minutes)

Open the ConnectWise invoice register for the quarter, filter to the three months, sum the total invoiced amount and the total GST. Compare against the Xero GST report.

Three reconciliation cases produce real variances and need attention:

  • Cycle cut-off mismatch. A ConnectWise agreement that bills on the 25th of the month posts an invoice that covers part of the next month. If your convention is issue-date, the invoice is in the quarter it was issued. If your convention is coverage-date, it might be in the next quarter. The Xero invoice date is what the GST report uses, so the convention must match across both systems.
  • Multi-currency rounding. USD invoices posted to a Xero AUD entity carry an exchange rate that rounds at line-item level. The variance is bounded (one or two cents per invoice) but accumulates across 60 to 200 invoices per quarter. Accept the variance under $20 total per quarter; chase it over.
  • Manual adjustment journals. A bookkeeper posting a manual GST-adjustment journal to a Xero account that the integration also posts to will produce a duplicate that shows up on the GST report. Use a clear convention: integration-posted entries carry the CW- reference; any manual journal carries a MAN- prefix; the GST report runs cleanly when neither convention overlaps.

Stage 4: lodge BAS (20 minutes)

If your business is registered for quarterly BAS, the form is due by the 28th day of the month following the end of the quarter, with the Q2 (Oct-Dec) BAS extended to 28 February due to the summer break. The full due-date schedule is on the ATO due-dates page (ATO, accessed 24 May 2026).

Three lodgement paths exist:

  • Lodge direct via Xero (SBR). Xero lodges the BAS to the ATO via Standard Business Reporting. The BAS form is pre-filled from the GST report; you confirm the figures and submit. This is the path most Australian MSPs use because the reconciliation is already done in step three.
  • Lodge via myGov for Business. Manually copy the figures from the Xero GST report into the myGov for Business BAS form, confirm and submit. Slower; useful as a fallback if Xero SBR is misconfigured.
  • Lodge via a BAS agent. Hand the Xero GST report to your BAS agent or accountant, who lodges on your behalf. BAS agents have an extended lodgement window (typically four weeks longer than the standard due date). Xero supports BAS-agent workflows directly (Xero, accessed 24 May 2026).

For the PAYG withholding component (if you have employees), Xero Payroll feeds the PAYG figure into the same BAS form. For PAYG instalments (the ATO's mechanism for prepaying income tax), the ATO pre-fills the instalment amount on the BAS form based on prior-year income; you can vary it if your actual income is materially different.

The agreement-billing rule that bites every quarter

The single most common BAS-prep mistake we see is a ConnectWise agreement that should have billed in the quarter but did not, because the next-invoice date was changed mid-cycle. The agreement quietly carries over to the next quarter, the GST on that invoice lands in the wrong BAS period, and you under-report GST on the quarter just gone.

The fix is in stage 1 of the BAS-prep routine, not in stage 3. During the month-end close of the third month, check the agreement schedule view and confirm every active agreement has billed for the periods that fall inside the quarter. If one has not, regenerate the invoice now, not next quarter. A late agreement invoice in the right quarter is a $0 variance; a missed agreement that surfaces three months later is a BAS revision.

Per the ATO BAS guidance, GST on sales must be reported for the period in which the supply was made (ATO, accessed 24 May 2026). For an MSP, that usually means the period the invoice was issued, on the standard accruals method. The convention you set during your month-end close (issue-date or coverage-date) must align with how you report on BAS.

Authoritative claim: the BAS is a downstream report, not a separate dataset

The BAS form is a transcription of the Xero GST report, which is a roll-up of the Xero invoice and bill data, which is a sync of the ConnectWise invoice and time data. The ATO BAS guidance confirms that registered businesses report GST on the basis of their accounting records (ATO, accessed 24 May 2026). This means a clean ConnectWise to Xero sync produces a clean BAS, and a messy sync produces a BAS that needs a revision.

The implication: do not "prep for BAS" by re-keying numbers into the BAS form from a spreadsheet. Prep for BAS by closing the quarter cleanly, running the Xero GST report, reconciling to ConnectWise, and lodging from Xero. The total time investment is 90 minutes per quarter, six hours per year.

Quarterly due dates for standard lodgers

The ATO quarterly BAS due dates for standard lodgers (ATO, accessed 24 May 2026):

  • Q1 (1 Jul to 30 Sep): lodge and pay by 28 October.
  • Q2 (1 Oct to 31 Dec): lodge and pay by 28 February (extended due to summer holiday period).
  • Q3 (1 Jan to 31 Mar): lodge and pay by 28 April.
  • Q4 (1 Apr to 30 Jun): lodge and pay by 28 July.

BAS agents get an extended lodgement window of approximately four extra weeks per quarter, which is one of the cleanest reasons Australian MSPs work with a BAS agent rather than self-lodging.

If you are registered as a monthly BAS lodger (turnover over $20 million per ATO thresholds, or by election), the due dates change to the 21st of the following month. Most MSPs are quarterly lodgers; check your registration on myGov for Business to confirm.

PAYG withholding and the W1/W2 fields

If you have employees, BAS also captures PAYG withholding (the income tax you withhold from staff wages and remit to the ATO). The W1 field on the BAS is the gross wages for the period; W2 is the PAYG withholding.

Xero Payroll feeds the W1 and W2 fields automatically into the BAS form when you lodge via Xero SBR. The values come from the payroll reports for the quarter, not from ConnectWise. The reconciliation step is to confirm the Xero Payroll summary for the quarter matches the W1/W2 figures on the BAS form before you submit.

For MSPs that pay technicians as employees and not as contractors, this is one to three minutes added to stage 4 of the BAS-prep. For MSPs that engage technicians as ABN contractors, W1 and W2 are zero and the step does not apply.

PAYG instalments and the T7/T8 fields

PAYG instalments (the ATO's mechanism for businesses to prepay income tax quarterly rather than annually) appear on the BAS as T7 (the pre-filled instalment amount based on prior year) and T8 (the optional varied amount if the business's actual income is materially different from prior year).

If your MSP is in growth mode and quarterly profit is materially higher than the prior year, vary T8 upward to avoid a large bill at year-end tax time. If your MSP is in a quieter quarter and profit is materially lower, vary T8 downward (with care; the ATO charges interest if the variation under-estimates by too much).

Most MSPs use the ATO-pre-filled T7 in the first year and start varying in the second year once the pattern is clear.

Frequently asked questions

Do I need a BAS agent or can I lodge BAS myself?

You can lodge BAS yourself via Xero SBR or myGov for Business, with no BAS agent required. The reasons MSPs use a BAS agent are the extended lodgement window (approximately four extra weeks per quarter), the reduced risk of penalties for late lodgement, and the second pair of eyes on the GST treatment of new revenue lines. For a small to mid-market MSP doing $1m to $10m in revenue, a BAS agent is usually worth the modest cost.

When is my BAS due?

For standard quarterly lodgers, BAS is due by the 28th of the month following the end of the quarter, with Q2 (Oct-Dec) extended to 28 February. The ATO due-dates page is the authoritative source (ATO, accessed 24 May 2026). BAS agents get an extended lodgement window of approximately four extra weeks.

Why does my Xero GST report not match my ConnectWise invoice total?

Three causes. Cycle cut-off mismatch (an agreement invoice in the wrong quarter), multi-currency rounding (one or two cents per invoice that accumulates), or manual adjustment journals (a bookkeeper posted a duplicate). Walk back through the ConnectWise invoice register for the quarter to find the variance.

Do I include overseas supplier invoices in BAS?

Yes, but with the correct GST treatment. Overseas supplier invoices are usually GST-free (the supplier is not registered for Australian GST), which means they show in your accounting records at the full price with no GST credit. The exception is if you are registered for the GST-on-low-value-imports regime or if the supplier has registered for GST in Australia.

What if I miss a BAS lodgement?

The ATO can apply Failure to Lodge penalties, which scale by the size of the business and the number of days late. For a small MSP (turnover under $1m), the penalty is one penalty unit ($313 as of mid-2025) for each 28-day period late, capped at five units. The simpler fix is to set a calendar reminder for two weeks before each due date.

Can I lodge BAS direct from Xero?

Yes, via Xero's SBR (Standard Business Reporting) lodgement. The BAS form is pre-filled from the Xero GST report; you confirm the figures and submit. The Xero BAS agents page covers the agent workflow as well (Xero, accessed 24 May 2026).

Do PAYG instalments come from ConnectWise data?

No. PAYG instalments are calculated by the ATO based on your prior-year company income tax return, not from ConnectWise revenue. The ATO pre-fills the instalment on your BAS form. You can vary it (T8) if your actual income is materially different from prior year, but the data source is the ATO, not your operational systems.

What happens if my ConnectWise to Xero sync has been broken for the whole quarter?

Then the BAS-prep is the four-hour CSV-paste version, not the 90-minute integration version. The numbers on the BAS still need to be right; you just have to reconcile them by hand from ConnectWise CSV exports. If the sync has been broken for a quarter, fix the sync first, then run the routine. Talk to the team via contact if you need help getting the sync back to a working state.

Connect Zero is built by Auswide IT, an Australian MSP integration vendor based in Adelaide. We run ConnectWise on our own books and lodge our own BAS each quarter using this routine. Last updated 24 May 2026.