When your business is registered to lodge a BAS statement, you will be required to add a GST amount to your tax invoices, collect the GST from your customers and make the payment to the Australian Taxation Office (ATO) when your BAS is due.
When you invoice your customers, you’ll need to supply them with a tax invoice which shows the GST component of your invoice. But first, you’ll need to work out what your ‘taxable sales’ are.
Taxable sales are defined as sales where GST is payable. Not all goods and services are required to collect GST and you should be aware if this applies to you.
When completing your BAS you must report taxable sales and the GST in their price at:
- G1 Total sales
- 1A GST on sales.
On your BAS you disclose either the GST-inclusive or the GST-exclusive total sales figure at G1. You must indicate your choice.
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| Table 1: Taxable sales | |||
| Transaction | Transaction description | GST tax code | Completing your BAS |
| Goods and services | This is the sale of goods or services you sell in your business. | GST | G1 Total sales1A GST on sales |
| Assets | The sale of assets which include office equipment, machinery or transfers of ownership of equipment. | GST | G1 Total sales1A GST on sales |
| Property | You may incur GST on the sale or lease of property. | GST | G1 Total sales1A GST on sales |
GST-free sales
GST-free sales are sales where GST is not payable, but you may claim GST credits for purchases relating to these sales.
When completing your BAS you must report GST-free sales at G1 Total sales.
| Table 2: GST-free sales | |||
| Transaction | Transaction description | GST tax code | Completing your BAS |
| Fresh food | Most basic food is GST free, but there are exceptions. | No GST | G1 Total sales |
| Medical and health | Most medical care services and medicines are GST free. | No GST | G1 Total sales |
| Education | This includes educational courses, materials, excursions. | No GST | G1 Total sales |
| Childcare | Childcare services that are eligible. | No GST | G1 Total sales |
| Exported goods and services | Timeframes on good exported from Australia and services. Rules apply. | No GST | G1 Total sales |
| Sale of business | Sale of a business. Conditions must be met. | No GST | G1 Total sales |
Input-taxed sales
Input-taxed sales are sales where GST is not payable, and you generally can’t claim GST credits for purchases relating to these sales.
When completing your BAS you must report input-taxed sales at G1 Total sales.
| Table 3: Input-taxed sales | |||
| Transaction | Transaction description | GST tax code | Completing your BAS |
| Property | Residential rental supplies and premises. | No GST | G1 Total sales |
| Financial Sales | Sales where the product is money, shares or other securities. | No GST | G1 Total sales |
| Fund-raising | Charities, gifts and government schools. | No GST | G1 Total sales |
Purchases with GST in the price
You can only claim GST credits for GST included in the price of purchases that you buy or import for your GST-registered business, and that relate to taxable sales or GST-free sales.
To claim GST credits, when completing your BAS you must report the GST included in the price of your purchases at 1B GST on purchases.
You do not report your total purchases.
| Table 4: Purchases with GST in the price | |||
| Transaction | Transaction description | GST tax code | Completing your BAS |
| Goods and services | All goods and services that have GST in the price. This includes capital purchases, inventory, running expenses and repairs. | GST | 1B GST on purchases |
| Imported goods (>$1,000) | Imports of most goods where customs value is greater than $1,000 which included GST in the price. | GST | 1B GST on purchases |
| Second-hand goods from a GST registered business OR ≤$300 value | Second hand goods from a GST registered business. | GST | 1B GST on purchases |
| Business expenses for entertainment subject to fringe benefits tax (FBT) | Fringe benefits entertainment related goods and services. | GST | 1B GST on purchases |
| Hire purchase | Hire is treated as a standalone purchase in a tax period. | GST | 1B GST on purchases |
| Lease agreements | Lease agreements are generally subject to GST. | GST | 1B GST on purchases |
| Domestic business-related travel | If you claim GST for travel, it must relate to the business portion only. | GST | 1B GST on purchases |
| Fuel (eg petrol, diesel and fuel blends) | The GST on fuel can be claimed on the business portion. | GST | 1B GST on purchases7D Fuel tax credit |
Download this article: What does ‘taxable sales’ mean on the Business Activity Statement
A valid tax invoice for purchases over $82.50 is required to claim a GST credit.
Purchases with no GST in the price or where no GST credits can be claimed
| Table 5: Purchases with no GST in the price or where no GST credits can be claimed | |||
| Transaction | Transaction description | GST tax code | Completing your BAS |
| GST-free goods and services | This includes most food, medical goods and services and education / educational supplies. | No GST | Not reported on BAS for GST |
| Purchases from a business not registered for GST | If no GST has been charged from non-registered GST businesses. | No GST | Not reported on BAS for GST |
| Life and health insurance | Insurance premiums for life or health insurance. | No GST | Not reported on BAS for GST |
| Motor vehicle private sale | Purchase of a motor vehicle from a private seller not registered for GST. | No GST | Not reported on BAS for GST |
| Imports – $1,000 or < | Goods that are imported of a value of $1,000 or less | No GST | Not reported on BAS for GST |
| Business expenses for FBT-exempt employee benefits | This includes minor benefits of below $300, food and drink supplied to employees, taxi travel from a place of work to an external venue such as a home or restaurant. | No GST | Not reported on BAS for GST |
| Second-hand goods from charity OR >$300 value | Purchase of a second-hand item from a charitable organisation is GST-free. | No GST | Not reported on BAS for GST |
| Second-hand goods from charity OR >$300 value | If you’ve purchased items over $300 from a private seller or business not registered for GST, you can claim SGT credits if it wasn’t included n the price. | GST | 1B GST on purchases (claimed at the time you sell the item you have purchased). |
| International travel | International travel, including domestic leg of an overseas trip, is GST-free. | No GST | Not reported on BAS for GST |
| Purchases for input-taxed sales | Advice is recommended on input-taxed supplies related to residential accommodation. | No GST | Not reported on BAS for GST |
| Property | Advice should be sought from a tax professional on GST related property sales or purchases. | No GST | Not reported on BAS for GST |
Mixed purchases (both taxable and GST-free and/or input-taxed components)
Mixed purchases contain both a taxable component and a GST-free and/or input-taxed component. On your BAS, you report the GST in the price of only the taxable component at 1B GST on purchases.
| Table 6: Mixed purchases (both taxable and GST-free and/or input-taxed components) | |||
| Transaction | Transaction description | GST tax code/Manual override | Completing your BAS |
| Utility bills:electricitytelephoneinternet | You may claim credits on connection fees, supply and usage charges and call usage that is domestic. You cannot claim GST on interest due to late payments or international or roaming calls. | GST – Code total amount of invoice as ‘GST’ and manually override GST dollar amount to reflect GST shown on the invoice. | 1B GST on purchasesNote: only claim GST dollar amount on invoice. |
| Government rates and water | GST credits can be claimed on rubbish collection fees. | GST – Code total amount of invoice as ‘GST’ and manually override GST dollar amount to reflect GST shown on the invoice. | 1B GST on purchasesNote: only claim GST dollar amount on invoice. |
| Mixed private and business use | You can claim GST on the business related portion of your expenses only. Speak with a tax professional to work out your business related portion. | GST – Note: No manual override should be done because business and private expenses are entered in their respective separate accounts. | 1B GST on purchases |
| Purchase motor vehicle from GST- registered dealer or other business | You may claim GST credits for the GST in the price of the vehicle and insurance. | GST – Note: No manual override should be done because motor vehicle and insurance expenses are entered in their respective separate accounts. | 1B GST on purchases |
| Motor vehicle registration | You can claim GST in the price of the insurance component of the registration. Stamp fees and government registration fees do not have a GST component. | GST – Code total amount of invoice as ‘GST’ and manually override GST dollar amount to reflect GST shown on the invoice. | 1B GST on purchasesNote: only claim GST dollar amount on invoice. |
| Insurance for business use | Only the GST part of the insurance premium can be claimed on the business-related portion only. | GST – Code total amount of invoice as ‘GST’ and manually override GST dollar amount to reflect GST shown on the invoice. | 1B GST on purchasesNote: only claim GST dollar amount on invoice. |
Items not reported on the BAS for GST purposes
| Table 7: Items not reported on the BAS for GST purposes | |||
| Transaction | Transaction description | GST tax code | Completing your BAS |
| Transactions not subject to GST | Private expenses unrelated to your business DepreciationDividends receivedInterest paidFinesMost Australian government taxesBank fees and chargesPrincipal payments on finance and loan interestStamp dutySale of your home (main residence)SuperannuationSalary and wagesNon-deductible entertainment expensesDonations | Out of scope/No tax/Not reportable | Not reported on BAS for GST |
Pro Tax Tip: It pays to know what GST credits you can claim when you need to lodge your BAS. This will offset and minimise the amount of GST you will need to pay to the ATO. It’s best to stay on top of your bookkeeping so you know your current businesses financial state.
It doesn’t have to be confusing. If figures aren’t your strong suit, or if you don’t have the time to reconcile your books, it might pay to hire a bookkeeper or accountant for your business.
Taking care of business
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