GST refunds for businesses in Australia
Goods and Services Tax (GST) refunds for businesses in Australia are distributed by the Australian Tax Office (ATO). For some businesses, it's a legal requirement to register for and collect GST. If you're one of those businesses, you must lodge a business statement activity (BAS) and keep accurate GST records to claim GST credits.
This guide explains GST, which business expenses are eligible to claim GST credits, and when you're entitled to a GST (or indirect tax) refund.
What is GST?
GST is a 10% broad-based tax added to the price of most products and services in Australia.
If you're a GST-registered business, you can claim the GST you pay on business expenses. You also must charge GST on what you sell - and collect it on the ATO’s behalf.
GST is an indirect tax levied on products and services you consume rather than on your income or profit. It's also a flat tax, meaning the GST tax rate doesn't change based on how much you earn, or how much it costs.
When should a business register for GST?
Register your business for GST as soon as you think you'll earn over $75,000 in 12 months. This rule applies to all types of businesses — sole traders, contractors, partnerships or companies. If you provide taxi or limousine travel including ride-sharing services (e.g. Uber, Didi or OLA), you need to register for GST regardless of your GST turnover. Once registered, you must lodge your BAS monthly or quarterly or lodge annual GST returns.
What is a GST refund?
A GST refund is when your GST credits (GST from your purchases) are more than the amount of GST you owe (GST from your sales).
As a GST-registered business in Australia, you must put aside the GST you collect to pay it to the ATO when it's due. You can also claim input tax credits for the GST you pay on any business-related expenses. You can use these credits to offset the GST you owe the ATO - or you may be entitled to a refund.
How to get a GST refund
To get a GST refund, you must lodge a business activity statement to report your sales and purchases. These records will determine whether you can claim GST input tax credits and if you're entitled to a refund.
There are five ways to lodge your BAS:
Use online accounting software
Sole traders: Go to myGov - an account you set up to access a range of government services and link the account to the ATO
Businesses: Go to online services for business - an ATO website used to manage tax affairs
Have a registered tax or BAS agent submit it for you
Mail your original, completed BAS to the ATO
On what business expenses can you claim GST?
As a GST-registered business, you can claim the GST you've paid on business expenses. The definition of a business expense is a product or service used for business purposes.
Here are some common examples of business expenses you can claim GST for:
Rent for business premises
Home office expenses
The cost of inventory and stock
Advertising and marketing costs
Professional development
Telecommunications and utility bills
Professional association memberships
Domestic travel and accommodation costs
Depreciation
You can generally claim a credit for the GST part of a business-related asset's cost price. You calculate depreciation on the GST-exclusive price of the asset. The exception is cars where the ATO imposes a car limit every year that limits the maximum GST and depreciation you can claim.
Certain items aren't considered business expenses, so you can't claim GST:
Life insurance
Income tax
GST
Fines and penalties
Clothes – except uniforms or protective gear
Health expenses – doctor's visits, glasses or hearing aids
Some business expenses, like a car or laptop, may be used for business and private purposes. You can only claim a GST credit for the business portion. For example, if you use your car 75% of the time for work, you can claim a credit of 75% of the GST paid.
When can a business claim GST?
You can claim GST back when you've:
Purchased goods or services for your business, and you've received a tax invoice from your supplier (for purchases over $82.50)
Paid GST on unpaid income (a customer left you with a bad debt)
When are you unable to claim GST?
You're unable to claim GST on the following:
Products and services without GST in the price, such as: GST-free sales (like basic food), input-taxed sales (like loan interest, bank fees and residential accommodation)
Staff wages
Real property purchased under the margin scheme
You must also be GST-registered to claim GST credits and have a valid tax invoice for purchases over $82.50 (including GST). You should also check that you’re still within the time limit for claiming a GST credit.
How is a GST refund calculated?
A GST refund is calculated by subtracting the GST you've paid on business expenses (and claimed GST credits for) from the GST you've collected. If your GST credits are more than the GST owing, the ATO will work out if you're entitled to a refund.
When does a business submit their BAS for a GST refund?
When registering for GST, you must submit and pay your BAS monthly, quarterly or annually. If you fail to lodge your BAS on time, you may be liable for penalties and interest charges.
Your reporting and payment cycle depends on your GST turnover:
Quarterly
Businesses with GST turnover of less than $20 million must lodge BAS and GST returns quarterly (unless told otherwise by the ATO).
Monthly
If your GST turnover exceeds $20 million, your BAS gets lodged monthly.
Annually
If you've volunteered to register for GST and your GST turnover is below the GST threshold of $75,000, you only need to lodge a BAS once a year.
GST refund FAQs
Do businesses get money back from GST?
Yes, if the GST amount you've paid exceeds what you collected, you'll be entitled to a refund.
How do I record GST refunds received from the ATO?
Once you've completed your end-of-period reporting requirements, you must record the refund you'll receive from ATO. The easiest way to record GST activity is with accounting software – and you can record the refund as money received.
How do I record GST payments to the ATO?
Like recording GST refunds, you must record taxable supply information and GST payments to ATO. However, the information you need to provide or keep depends on the value and the type of supply.
How often do businesses remit GST to the ATO?
How often you remit GST to the ATO depends on how often you lodge your BAS.
Monthly
The due date to lodge and pay your GST is the 21 day of the following month. For example, your June monthly BAS is due on 21 July.
Quarterly
The due date to lodge and pay your GST is the 28 of the following month, except for quarter 2. For example, for quarter 1 (July, August, September), you must lodge and pay GST by 28 October. For quarter 2 (October, November and December), you must lodge and pay GST by 28 February.
Annually
The due date to lodge and pay your GST is 31 October. If you're not lodging a tax return, the due date is 28 February after the financial year has ended.
If you use a registered tax or BAS agent, you may get concession for lodgement and payment.
Can I get a GST refund on international goods?
You can generally claim back the GST you pay on imported goods. GST is added to the sum of the price of the goods, any customs duty payable, shipping costs, insurance for transport and any wine tax payable.
You generally pay the GST before customs release the shipment unless you are registered under the Deferred GST scheme.
The Australian Border Force charges GST on international goods, not the supplier (unless the supplier undertakes a taxable activity in Australia).
Can I get a GST refund on international services?
No, you can't get a GST refund on international services. GST-registered businesses don't pay GST on services or subscriptions from overseas suppliers, so there's no GST to claim.
Can individuals get a GST refund?
Yes, GST-registered individuals (for example, sole traders) can get a GST refund if they're entitled to one.
Automatically calculate GST with MYOB
If registered for GST, you're legally obligated to file GST returns and keep a record of taxable supply information. With MYOB's accounting software, you can automatically calculate what you owe and lodge your GST return directly with ATO (it'll even pre-fill your reports with all the necessary details for you). Start your free trial today!
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
MYOB is not a registered entity pursuant to the Tax Agent Services Act 2009 (TASA) and therefore cannot provide taxation advice to clients. If you have a query concerning taxation including filing your BAS return or annual tax statements then you should consult with your accountant or other registered tax adviser.