Claiming GST credit

When you can claim a GST credit?

You must be registered for GST to claim GST credits.

You can claim a GST credit for a the price you pay for things that you use in your business. This is called an input tax credit, (or a credit for the GST included in the price of your business costs).

You claim GST credits in your business activity statement.

You can claim GST credits if the following conditions apply:

  • You intend to use your purchase solely or partly for your business, and the purchase does not relate to making input-taxed supplies.
  • The purchase price included GST.
  • You provide or are liable to provide payment for the item you purchased.
  • You have a tax invoice from your supplier (for purchases more than A$82.50).

A four year time limit applies for claiming GST credits.

GST and purchases for private use

If you purchase goods or services for both business and private use, you can only claim a GST credit for the part of the purchase relating to your business use.

If you later find your actual use differed from your intended use, you may need to adjust the amount of GST credits you have claimed.

If you are a small business, you may be able to account for the private portion of your business purchases once a year, rather than each time you lodge an activity statement. To do this you need to make an annual ‘private apportionment election’.

When you need a tax invoice

You must have a tax invoice to claim a GST credit for purchases that cost more than A$82.50 (including GST).

Your supplier has 28 days to provide you with a tax invoice after you request one. Wait until you receive it before you claim the GST credit, even if this is in a later reporting period.

When you should not be charged GST

Under new law, GST applies to:

  • imported services and digital products from 1 July 2017
  • low value imported goods from 1 July 2018.

You should not be charged GST on these sales if you are registered for GST (and provided that you give the supplier your ABN and state that you are registered).

The supplier is not required to provide tax invoices for these sales (see ‘When you don’t receive a tax invoice‘ below for when you have been charged GST by a supplier who does not or cannot provide you with a tax invoice.)

If you have not been charged GST on a purchase because you have provided the supplier with your ABN and a statement that you are registered for GST, then, in some circumstances, ‘reverse charge’ rules require you to pay GST on the relevant purchase through your BAS.

Broadly, under these reverse charge rules, you will need to pay GST on a purchase if you would not have been entitled to claim a full GST credit.

Tax invoice is incomplete

An invoice containing incorrect or incomplete information is not a valid tax invoice. You may be able to treat it as a tax invoice if it is missing information that can be obtained from other documents the supplier has given you. Alternatively, you can ask your supplier to replace it with a complete and correct tax invoice. The Commissioner also has the power to treat an incomplete document as a tax invoice.

Small purchases

To claim a GST credit for purchases that cost A$82.50 or less (including GST), you should have one of the following:

  • a tax invoice
  • a cash register docket
  • a receipt
  • an invoice.

If you can’t get one of these, keep a record of the purchase, such as a diary entry with:

  • the name and ABN of the supplier
  • the date of purchase
  • a description of the items purchased
  • the amount paid.

 

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