Can I claim GST credits for business purchases?

You can claim a credit for any GST for most business purchases, however, you must be registered for GST to claim GST credits and there are some things that you are not permitted to claim for or are GST-free.

• If your suppliers aren't registered for GST, you will be unable to claim GST credits. This applies even if you are given a tax invoice with an ABN and GST amount on it. The ATO app allows you to check if your suppliers are registered for GST.
• Basic foods, some medical goods or services and other items are GST-free.
• You can only claim the amount of GST shown on the tax invoice.
• If you use an item for both personal and business use, remember that you can only claim the business portion.
• There is no GST on wages you pay to staff.
• There are also some property transactions for which you are unable to claim GST credits, e.g. when buying a property using the margin scheme or build-to-rent developments.

Remember – it’s really important to keep hold of your tax invoices as part of your record keeping, and that a four-year time limit applies for claiming GST credits. 

You claim GST credits in your business activity statement. If you’d like help and advice with this, contact us today for a free initial consultation.

Date published 11 Feb 2021

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.