Fact sheet for business operators
GST credits for business
TERMS WE USE
When we say:
■ GST credit, we mean the GST term input tax credit
■ you, we mean you as a business entity
■ sales, we mean the GST term supplies
■ purchases, we mean the GST term acquisitions.
HOW DO GST CREDITS WORK?
Generally, you must pay GST to us for taxable sales of goods
and services you make as part of your business. This is
calculated as one-eleventh of the sale price.
If you are entitled to claim a GST credit, you can claim back the
GST you pay in the price of purchases you use in your
business. You can also offset these GST credits against the
amount of GST you are liable to pay to us.
If your GST credits are greater than the amount of GST you are
liable to pay, you will be entitled to a refund.
NAT 3019-07.2010
Business
CAN YOU CLAIM A GST CREDIT?
To claim GST credits, you must be:
■ registered for GST
■ purchasing goods or services (with GST in the price) to use
in your business.
If you are not registered for GST, you:
■ cannot include GST in the price of sales you make
■ will not be able to claim GST credits
■ will still have GST included in the price of most of your
business purchases.
For more information about registering your business
for GST and calculating your GST turnover, refer to GST
for small business (NAT 3014).
GST CREDITS FOR BUSINESS

CAN YOU CLAIM GST CREDITS FOR ALL
PURCHASES USED IN YOUR BUSINESS?
Whether you can claim GST credits depends on how you use
the goods or services you purchase and whether they are
taxable, GST-free or input taxed.
Taxable sales
Most goods and services are taxable and you must pay GST to
us on taxable sales you make.
If you make taxable sales, you can also claim GST credits for
the GST included in the price of things you purchase and use in
your business.
GST-free purchases
Some goods and services are GST-free; for example, basic
food, exports and some health services. As GST is not included
in the price of GST-free goods and services, you cannot claim
GST credits for these purchases.
If you sell GST-free goods or services, you can still claim a GST
credit for the GST you pay in the price of things you purchase to
use in your business. For example, a hospital does not include
GST in the price of most of its services; however, if it buys
disinfectant, it can claim a GST credit for the GST included in
the price of the disinfectant.
Input taxed purchases
Some goods and services, such as certain financial services,
are input taxed. This means GST is not included in the price of
these goods and services, so you cannot claim GST credits for
these purchases.
If you only sell input taxed goods or services you cannot claim
GST credits for GST you pay in the price of things you purchase
and use in your business. For example, if a bank buys a
calculator to calculate interest on its housing loans, GST will be
included in the price of the calculator. However, the bank cannot
claim a GST credit for the GST it pays in the price of the
calculator.
Purchases you use for private purposes
You cannot claim GST credits for the GST you pay in the price
of goods and services you use only for private purposes. For
example, if you own a roof tiling business, you cannot claim
GST credits for the GST included in the price of any tiles you
use on your own house.
Purchases you use for both business
and private purposes
You are allowed a partial GST credit for the GST you pay in the
price of things you use partly for business purposes and partly
for private purposes.
The amount of the GST credit you are entitled to depends on
how much you use the purchase for business purposes.
However, if you account on a cash basis and have not paid for
the purchase in full, you can only claim a credit for the GST
included in the amount you have paid.
For more information about accounting on a cash
basis, refer to Cash and non-cash accounting (NAT 3136).
Purchases used partly to make input taxed sales
You can also claim a partial GST credit for the GST you pay in
the price of things you use to make partly taxable or GST-free
sales and partly to make input taxed sales.
EXAMPLE 1
Leigh buys a computer for his business. He plans to use the
computer 60% in connection with his lawn mowing
business (taxable supply), and 40% in connection with his
residential rental property (input taxed supply). Leigh is
entitled to a GST credit of 60% of the full GST credit.

For more information about these types of purchases,

refer to:
■ GST for small business (NAT 3014)
■ GST and financial supplies – completing your activity
statement (NAT 10816).

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GST CREDITS FOR BUSINESS
RECORD KEEPING
To claim GST credits, you must have a valid tax invoice for the
goods and services you purchase for your business. However,
you can claim GST credits for business purchases you make up
to $82.50 without holding a tax invoice as long as you keep
records that support the claim (for example, cash register
dockets or receipts). These records will also help you keep track
of any GST credits you can claim.
For more information about tax invoices, refer to:
■ Valid tax invoices and GST credits (NAT 12358)
■ How to set out tax invoices and invoices (NAT 11675).
HOW DO YOU WORK OUT A GST CREDIT?
Your tax invoice may specify the amount of GST included in the
price of your purchase. However, if the tax invoice only states
that the price includes GST, you can work out the GST amount
by dividing the price by 11.
This is the amount of the GST credit you can claim if you use
the purchase wholly for business purposes. If the purchase is
partly used for private purposes, you can still claim a GST credit
for the portion of the amount that you use the purchase for
business purposes.
If you account on a cash basis and have not paid the full price
of a purchase, you can only claim a credit for the GST included
in the amount you have paid for.
ANNUAL APPORTIONMENT
You may be eligible to make an annual apportionment election.
This will allow you to do both of the following:
■ claim a GST credit for the GST included in the price of
purchases you make
■ account once a year, rather than when you lodge your activity
statements, for the amount you use your business purchases
for private purposes.
You can include purchases that you use for both of the
following:
■ private purposes
■ business purposes but not used solely to make input
taxed sales.
At the end of the financial year in which you claim the GST
credit, you must make a single increasing adjustment to
account for how much you used the purchases:
■ for private purposes
■ to make sales other than input taxed sales.
There are rules which may apply to you if you make
financial supplies. For more information about these rules
and the annual apportionment election, refer to GST and
annual private apportionment (NAT 12877).
HOW DO YOU REPORT AND CLAIM GST?
You report the GST you must pay and the GST credits you wish
to claim on your monthly, quarterly or annual activity statement.
You report many of your other tax obligations to us on this form.
For more information about reporting GST, refer to
■ Goods and services tax – completing your activity
statement (NAT 7392)
■ Quarterly GST options (NAT 4149)
■ Reporting GST monthly (NAT 4150)
■ Report your GST once a year (NAT 12906).
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GST CREDITS FOR BUSINESS
MORE INFORMATION
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This publication was current at July 2010.
PUBLISHED BY
Australian Taxation Office
Canberra
July 2010
JS 17081