When you make purchases for your business, you can only claim GST credits if you meet three criteria:
- Your business is registered for GST
- The purchase price includes GST
- You have proper tax invoices for purchases above $82.50 (including GST)
Make sure you check tax invoices for the amount of GST paid, rather than dividing total business costs by 11. Some basic food items like fruit and vegetables are GST-free and can’t be claimed on your activity statement.
If the invoice says ‘price includes GST’, you can divide the total purchase price by 11, provided you use the item solely for business purposes. If the item includes private use, you can only claim a GST credit for the portion used for business.
If you account for GST on a cash basis and you’ve only partly paid for the purchase, you can only claim a GST credit on the paid portion.
You must hold valid tax invoices for business purchases over $82.50 (including GST). Other documents like bank statements, purchase orders or delivery receipts aren’t sufficient to meet the tax invoice requirements.
If you have any issues or queries regarding GST, give us a call on (08) 9321 2642!
This information is provided to you by the Australian Taxation Office Small Business Newsroom (1 February 2018)