Quick answer
The three-way match compares three sources of the same story: turnover on your lodged BAS, deposits on your bank statements and revenue in your financials or tax return. They will rarely match to the dollar, because of GST, timing and transfers. Assessors look for a believable relationship and a reason for any gap, so prepare a short reconciliation note.
Key points
- Three sources, one story: BAS, bank deposits and financials.
- Perfect matches are rare; believable relationships are the goal.
- GST, timing, transfers and cash takings explain most gaps.
- A five-line reconciliation note often removes the whole question.
- Sources
- BAS, bank statements, financials or tax return
- Normal gap causes
- GST, timing, transfers, cash, refunds
- Fix
- A short reconciliation note
What is the three-way match?
It is the assessor’s central consistency check. Your business tells its story three times, in three different documents prepared for three different audiences. The BAS tells the ATO what you sold. The bank statements tell the bank what arrived. The financials tell your accountant, and the ATO again at year-end, what the whole year looked like. If all three describe the same business, the file is credible. If they describe different businesses, it is not.
An assessor does this comparison quickly and informally, usually with a calculator and a pencil. You can do it more carefully, because you have the context.
Why will the three never match exactly?
Because they measure slightly different things.
| Source | What it measures | Why it differs |
|---|---|---|
| BAS | Sales reported for a quarter, often on an invoice or cash basis, with GST labels | Timing; GST-free or input-taxed sales; adjustments |
| Bank deposits | Money that actually arrived in the account | Includes GST collected, transfers, loans, refunds; excludes unbanked cash |
| Financials | Revenue for a year, with accounting adjustments | Accruals; year-end timing; non-cash items |
Add the ATO’s own due dates for the cycle (the 28th of the month after the quarter for Q1, Q3 and Q4, and 28 February for the December quarter) and you can see why the quarterly BAS and a calendar-month bank statement never line up neatly.
What size gap is normal?
There is no official threshold, and the assessor’s tolerance depends on the file. What matters is that you can say where the difference comes from. A deposit total slightly above BAS turnover usually reflects GST collected. A deposit total below turnover usually reflects timing: sales invoiced but not yet paid. A deposit total far above turnover raises questions about transfers, loans or non-trading income.
Illustrative example. A catering business has quarterly BAS turnover of 90 units and bank deposits of 104. The note reads: “Deposits include GST collected (about 9), one 3-unit refund from a supplier and a 2-unit transfer from our savings account on 14 August.” The gap is fully accounted for in three lines.
How do I build a reconciliation note?
Five lines are enough for most businesses.
- State the period you are reconciling (one quarter works well).
- Take the BAS total sales (usually the G1 figure, which includes GST).
- Take the bank credits for the same period.
- List what accounts for the difference: GST, timing, transfers, refunds, cash, loans.
- Say what is left unexplained, if anything, and what you think it is.
The G1 label on a BAS is total sales including GST, which is why it sits comfortably next to GST-inclusive bank deposits. Ask your bookkeeper if you are unsure of the right line.
What happens when the gap is large?
The assessor asks. And the questions come at the worst time, in the middle of the assessment. If you see a big gap in your own pre-check, there are only three honest explanations: unrecorded cash, non-trading deposits, or a lodgement that does not reflect reality. The first two are manageable with documents. The third is a conversation with your accountant before you lodge anything. The page on unexplained deposits and mismatches lists the common causes and the neatest way to caption each.
What if my BAS is behind?
Then there is nothing to match, and the assessor will ask why. The sequence for catching up is set out in catching up overdue BAS and returns. ATO online services for business allows lodgement of activity statements, and shows your history for the last four years, so the information is easy to retrieve once you are logged in.
How does the match connect to the financials?
At year-end, the revenue in your accounts should be explainable from the sum of the four BAS quarters, plus adjustments. The guide to reading your financials like an assessor takes the same view of the profit and loss and the balance sheet. And because tax time is the natural moment to reconcile, the EOFY guide builds the note into your year-end routine.
What if the gap is in my favour?
Sometimes bank deposits are lower than BAS turnover, not higher. That happens when sales are invoiced but not yet paid, when a large customer pays in the next quarter or when takings are banked late. It is a timing gap, and the debtor list or an ageing report can show it.
Assessors treat a timing gap very differently from an unexplained one. Attach the debtor report, mark the invoices that explain the difference and add a line to the reconciliation note. A gap that reverses in the next quarter is the strongest possible evidence that the figures are honest, because real timing differences wash out over time.
How often should I run the match?
Quarterly is enough for most businesses, and it fits the BAS rhythm. Do it as soon as the BAS is lodged, while the quarter is fresh. At year-end, extend the same note across the four quarters and compare with the profit and loss. Three or four reconciliation notes on file means a future application starts with its hardest question already answered.
Ready to lodge?
If your three sources line up, or you have a clear note explaining why they do not, lodge a free enquiry. It takes about a minute, does not touch your credit file at this stage, and goes to one real person, not a crowd of lenders.
Keep the form accurate: turnover, trading history, structure, state and the amount you need. Those answers become the first thing the specialist checks against your documents, and a match between what you say and what you send is the best start a file can have.
Frequently asked questions
Why would BAS turnover differ from my bank deposits?
Common reasons include GST (deposits are usually GST-inclusive while some BAS labels are not), timing of invoices versus payments, transfers between accounts, refunds, loans received and cash that is banked later.
Should the three figures match exactly?
No. What assessors want is a believable, explainable relationship. A gap that is easily accounted for reads as honest; a gap nobody can explain reads as a risk.
What if I am not registered for GST?
Then there is no BAS turnover to compare, and the match is between the bank statements and the tax return or financials. The ATO sets the registration threshold at $75,000 of GST turnover.
How often is BAS lodged?
Most small businesses lodge quarterly. The ATO's published due dates are the 28th of the month after the quarter ends for Q1, Q3 and Q4, with the December quarter due on 28 February.
Can my accountant write the reconciliation note?
Yes, and a brief note from an accountant carries weight. But you can also write it yourself using your records; the point is that it exists.