What Expenses Can Claim GST Credits on BAS?

When you search what expenses can claim GST credits BAS, you are really trying to avoid two costly mistakes: missing credits you are entitled to claim, or claiming GST that does not belong on your BAS. The good news is that the basic test is straightforward. If you buy something for your GST-registered business, the supplier charges GST, and you have the right records, you can usually claim the GST component as a credit.

That credit reduces the GST you owe from your sales. It is not an extra deduction and it is not a guess. Get your purchase records right each quarter and the number for BAS label 1B becomes much easier to trust.

The three checks before you claim a GST credit

Before adding GST from an expense to your BAS, run through three questions. Was the purchase made for your business? Did the supplier actually charge GST? Do you have a valid tax invoice or other acceptable record?

The purchase must relate to earning income in your business. A sole trader’s phone bill, for example, may be partly business and partly personal. You can claim only the GST on the business portion. If 60% of the phone use is business-related, claim 60% of the GST, not the full amount.

You must also be registered for GST when you make the purchase. If you are not registered, you cannot claim GST credits, even if the receipt shows GST.

Finally, check the paperwork. For purchases over $82.50 including GST, you will generally need a tax invoice to claim the credit. Keep digital copies of invoices and receipts with your quarterly records. A bank transaction alone rarely tells you whether GST was charged or whether the expense was business-related.

Common BAS expenses that can include GST credits

Many ordinary costs of running a sole trader business can carry claimable GST. The key word is can. Check each invoice rather than assuming every expense has 10% GST in it.

• Business supplies and stock: materials, stationery, packaging, stock for resale, cleaning supplies and consumables used in your work.
• Technology and communications: business software, website hosting, computer repairs, mobile plans, internet, printers and office equipment. Overseas software subscriptions may not include Australian GST, so inspect the invoice.
• Marketing and professional services: advertising, printing, graphic design, bookkeeping, legal work and business coaching where GST is charged.
• Business travel and vehicle running costs: fuel, servicing, repairs, parking, taxis, accommodation and hire vehicles, but only to the extent they relate to business use and the invoice includes GST.
• Equipment and assets: tools, computers, cameras, machinery, office furniture and other business equipment can include GST credits when purchased. These are often capital purchases rather than regular operating expenses.

For a home-based business, you may also have GST in a portion of business phone, internet, electricity or office supplies. Home occupancy costs are more complicated. Residential rent, for example, does not normally include GST, so there is no GST credit to claim just because you work from a spare room.

Insurance needs a closer look too. Premiums can contain a GST component, but they may also include stamp duty or other charges that are not GST. Claim only the GST shown on the insurer’s tax invoice.

Expenses that usually do not give you a GST credit

A payment can be a genuine business cost without producing a GST credit. This is where sole traders often overstate their BAS purchases.

Wages, superannuation contributions and PAYG withholding do not include GST. Neither do income tax payments, loan repayments, interest, most bank charges, fines and penalties. Purchases from suppliers who are not registered for GST also have no GST to claim, even if the expense is fully business-related.

GST-free and input-taxed purchases need to stay out of your GST credit total. Examples can include certain health services, some education costs, basic food items and residential rent. Financial supplies can be particularly tricky, so do not assume that a fee from a bank or finance provider includes claimable GST.

Entertainment is another danger area. Taking a client to lunch may feel like a business expense, but GST credits are often not available for entertainment expenses. The same applies to some staff meals and social events. If the treatment is unclear, do not force it into 1B just because there is GST on the receipt. Check with a registered tax or BAS professional.

Do not claim the full GST on mixed-use purchases

Your business use percentage matters. A mobile phone used for client calls and personal scrolling is mixed-use. So is a vehicle used for both jobs and family errands. The GST credit must be apportioned on a fair and reasonable basis.

For example, a quarterly internet bill is $110 including $10 GST. If you reasonably use it 70% for business, your GST credit is $7. Record the full expense and the business-use method you used, so you can repeat it consistently next quarter.

This also applies when you buy an asset that is not used entirely in the business. A laptop used 80% for work does not create a 100% GST credit simply because you bought it through the business bank account.

Capital purchases versus regular expenses

Not every purchase belongs in the same BAS category. Day-to-day running costs are generally non-capital purchases. A new computer, expensive tool set, work vehicle or major piece of equipment is more likely to be a capital purchase.

Depending on your BAS reporting method, you may see labels such as G10 for capital purchases and G11 for non-capital purchases, alongside 1B for GST on purchases. Many small quarterly businesses use a simpler BAS that asks only for the GST amount at 1B. Your specific form determines which labels you need to complete.

The important point is this: capital versus non-capital affects how you report the purchase total, but the GST credit itself still flows into 1B where you are entitled to claim it. Do not treat a large purchase as non-claimable simply because it is an asset.

Calculate GST from the invoice, not from memory

If an invoice is fully taxable and shows a GST-inclusive total, the GST is usually one-eleventh of that total. A $220 purchase includes $20 GST. But do not apply the one-eleventh rule blindly.

Some invoices combine taxable items with GST-free items, delivery charges, overseas services or non-GST government fees. Others show a GST amount that is different from what you expect because only part of the bill is taxable. Use the GST amount printed on a valid tax invoice, then adjust it for any private or non-business use.

If you receive a refund, supplier credit or adjustment note, reduce the GST credit accordingly. Your BAS should reflect what you actually paid and were entitled to claim during the relevant period.

Get the timing right for your BAS

Your accounting basis affects when you claim. If you report GST on a cash basis, you generally claim the credit when you pay the supplier. If you report on a non-cash or accruals basis, you generally claim it when you receive the invoice.

Do not claim the same invoice twice because you entered it when received and again when paid. Likewise, do not pull receipts from the next quarter into the current BAS just to increase your credit. A simple, consistent system prevents both problems.

A practical quarterly process for 1B

Start with every business purchase for the quarter. Keep the invoice, identify whether GST was charged, remove private use, then total the remaining GST amounts. Separate capital items from normal operating expenses if your BAS asks for G10 and G11.

Next, compare your total against your bank transactions and card statements. This is not about claiming every payment. It is about making sure each payment has been considered and that no duplicate invoice has slipped in.

Then enter the GST credit total at 1B, along with the required purchase totals for your BAS format. A structured spreadsheet such as BASCalc can make this less stressful by separating your inputs and calculating the BAS labels for you. You still need to enter accurate figures and keep your records, but you do not need to hand-calculate every label.

When to get advice

Straightforward sole trader expenses are usually manageable. Get tailored advice if you have imported goods, purchase a car, deal with property, make financial supplies, pay international contractors, claim entertainment, or have a major mixed-use expense. Those situations can involve rules that a standard receipt check will not solve.

A clean quarterly habit is the real time-saver: keep invoices as they arrive, mark the business-use percentage where needed, and review your GST total before lodging. That gives you control of your BAS without leaving claimable credits behind.