Published: May 2025

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Goods and Services Tax (GST) compliance is a critical responsibility for Australian businesses registered for GST. Understanding GST rules, proper bookkeeping treatment, and accurate BAS inputs can prevent errors and ensure ATO compliance. This cheat-sheet provides a clear guide to GST categories, breaking each down with numerous examples of spend types and their GST treatments. Drawing on ATO guidelines, TPB advice, and Xero resources, we’ll help Australian businesses navigate GST with confidence.

Check out our free GST calculator here!

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GST Rules in Australia: A Quick Overview

GST is a 10% tax on most goods and services sold in Australia, effective since 1 July 2000. Businesses must register for GST if their annual turnover meets the ATO threshold if $75,000 revenue per year, with voluntary registration available for others, committing them to BAS lodgement.

Key rules include:

• Taxable Sales: Most sales are taxable at 10%. You charge GST and remit it via BAS.
• GST-Free Sales: No GST is charged (e.g., exports, basic food), but you can claim credits on related purchases.
• Input-Taxed Sales: No GST is charged (e.g., financial services), and you can’t claim credits on related purchases, per ATO guidelines.
• GST Credits: Claim credits on GST-inclusive business purchases, supported by valid tax invoices (over $82.50, including ABN, GST details).
• Record-Keeping: Retain tax invoices for five years, per ATO requirements.
• BAS Reporting Methods: Businesses report GST using either Simpler BAS or full reporting, depending on their circumstances.
  • Simpler BAS is a streamlined method for smaller businesses, requiring only three fields: G1 (total sales), 1A (GST on sales), and 1B (GST on purchases). It simplifies GST coding by using two categories (“GST” or “No GST”), reducing admin time.
  • Full reporting, typically used by larger businesses or those with complex GST needs (e.g., input-taxed supplies, frequent exports), requires seven fields: G1, G2 (export sales), G3 (other GST-free sales), G10 (capital purchases), G11 (non-capital purchases), 1A, and 1B. Full reporting demands detailed GST tracking, increasing compliance time but providing greater visibility into GST categories.

“Accurate records are essential to support GST claims and avoid penalties,” advises the Tax Practitioners Board (TPB).

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GST Coding Cheat-Sheet: Categories and Examples

GST coding ensures accurate BAS reporting. Incorrect coding can lead to overpaid GST, missed credits, or ATO penalties. Below, we outline high-level GST categories, breaking each down with examples of spend types and their GST treatments. These are applicable for businesses using Simpler BAS (G1, 1A, 1B) or full reporting (G1–G11, 1A, 1B), per ATO and Xero guidelines.

Check out our free GST calculator here!

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Category 1: Taxable Sales (Code: GST)

Taxable sales are subject to 10% GST, which you collect and remit to the ATO. These are reported in G1 (total sales) and 1A (GST on sales) for both Simpler BAS and full reporting.

Examples of Taxable Sales:

• Consulting services for a corporate client (e.g., software development, HR strategy).
• Retail sales of consumer goods (e.g., electronics, clothing).
• Subscription fees for a SaaS platform (e.g., accounting software, CRM tools).
• Installation services for equipment (e.g., factory machinery, office air conditioning).
• Training workshops for businesses (e.g., leadership training, data analytics courses).
• Graphic design services for a national advertising campaign.
• Website development for a retail chain.
• Sale of office equipment to a government department.
• Catering services for a corporate conference.
• Repair services for industrial machinery.
• Event management services for a product launch.
• Sale of agricultural supplies to a farming business.
• Photography services for a corporate event.
• Construction services for a commercial building.
• Logistics services for domestic delivery of goods.

GST Treatment: Charge 10% GST on the sale, code as GST in Xero, and include in BAS fields G1 and 1A.

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Category 2: GST-Free Sales (Code: GST-Free)

GST-free sales don’t attract GST, but you can claim credits on related purchases, per ATO rules. These are reported in G1 for Simpler BAS, or G1, G2 (exports), and G3 (other GST-free) for full reporting.

Examples of GST-Free Sales:

• Software development for an overseas client (export service).
• Medical equipment sold to a hospital (e.g., diagnostic machines, surgical tools).
• Online educational courses for international students (e.g., engineering modules, language classes).
• Basic food items supplied to a food bank (e.g., bread, milk, fresh vegetables).
• International freight services for exported goods.
• Health services software for a medical practice (e.g., patient records system).
• Export of manufactured goods (e.g., machinery parts shipped to Europe).
• Sale of GST-free childcare software to a daycare centre.
• Government-funded vocational training programs (e.g., trade skills courses).
• Sale of second-hand equipment to an overseas buyer (exported within 60 days).
• Telehealth platform for overseas patients.
• Export of agricultural products (e.g., wheat, wool).
• Sale of GST-free educational books to a school library.
• Medical research services for an international university.
• GST-free water supply services for a rural community.

GST Treatment: Don’t charge GST, code as GST-Free in Xero, and include in G1 (Simpler BAS) or G1, G2, G3 (full reporting). Claim credits on related purchases.

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Category 3: Input-Taxed Sales (Code: No GST)

Input-taxed sales don’t attract GST, and you can’t claim credits on related purchases, per ATO guidelines. These are reported in G1 for Simpler BAS, or G1 and G3 for full reporting.

Examples of Input-Taxed Sales:

• Financial consulting services (e.g., investment advice, tax planning).
• Monthly rent for a residential office space leased to a business.
• Bank fees earned from transaction services (e.g., merchant fees, ATM charges).
• Interest income from a corporate loan or savings account.
• Sale of residential property (e.g., leasing a home office space).
• Credit card processing fees charged to retail clients.
• Insurance brokerage services for commercial policies.
• Financial planning services for a large corporation.
• Revenue from issuing corporate bonds or shares.
• Superannuation management fees for a pension fund.
• Lease of residential land for a business office.
• Revenue from financial derivatives trading.
• Loan origination fees for a business mortgage.
• Advisory fees for a merger or acquisition.
• Revenue from managing a client’s investment portfolio.

GST Treatment: Don’t charge GST, code as No GST in Xero, and include in G1 (Simpler BAS) or G1 and G3 (full reporting). No credits on related purchases.

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Category 4: Business Purchases (Code: GST or GST-Free)

Business purchases may include GST, allowing you to claim credits if they’re business-related, per ATO rules. These are reported in 1B for Simpler BAS, or G10 (capital), G11 (non-capital), and 1B for full reporting.

Examples of GST-Inclusive Purchases (Code: GST):

• Cloud software subscriptions (e.g., AWS, Salesforce).
• Office supplies (e.g., stationery, printers).
• Capital equipment (e.g., manufacturing machinery, delivery trucks).
• Marketing services (e.g., social media ads, billboard campaigns).
• Professional fees (e.g., legal advice, audit services).
• Travel expenses for business conferences (e.g., flights, accommodation).
• Staff training courses (e.g., safety training, software certifications).
• Utility bills for a factory (e.g., electricity, gas).
• Catering for a corporate board meeting (if no FBT applies).
• Vehicle lease for company fleet.
• Construction materials for a new warehouse.
• IT support services for a corporate network.
• Office cleaning services for a head office.
• Furniture for a corporate reception area.
• Security services for a retail store.

Examples of GST-Free Purchases (Code: GST-Free):

• Overseas software licenses (e.g., US-based analytics tools, design software).
• International freight for imported business goods (if GST not paid at border).
• GST-free medical supplies for a hospital (e.g., PPE, vaccines).
• Educational materials for a university (e.g., research journals, e-learning platforms).
• Donations to a registered charity (e.g., equipment for a community centre).
• GST-free water rights purchased for agricultural use.
• Overseas consulting fees for a global project.
• GST-free agricultural seeds for a farming business.
• International training courses for staff (e.g., leadership program in Europe).
• GST-free export documentation services.

GST Treatment:

• GST-Inclusive: Code as GST in Xero, claim credit in 1B (Simpler BAS) or G10/G11 and 1B (full reporting).
• GST-Free: Code as GST-Free in Xero, no credit claimed.

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Category 5: Mixed-Use Purchases (Apportion Business Use)

Mixed-use purchases require apportionment based on business use, per ATO guidelines.

Examples of Mixed-Use Purchases:

• Laptop used for business tasks and personal entertainment.
• Mobile phone bill for business calls and personal messaging.
• Car lease for corporate travel and personal commuting.
• Home internet bill for remote work and personal use.
• Office space rent for business operations and personal storage.
• Software subscription for business projects and personal hobbies.
• Travel expenses for a trip combining business meetings and leisure.
• Electricity bill for a home office and household use.
• Professional membership fees for business networking and personal development.
• Camera equipment for corporate photography and personal projects.
• Tablet device for business presentations and personal gaming.
• Co-working space membership for work meetings and personal study.
• Printer for business documents and personal printing.
• Gym membership for employee wellness programs and personal use.
• Conference fees for professional development and personal interest sessions.

GST Treatment: Apportion based on business use percentage. Code the business portion as GST in Xero (claim credit for that portion in 1B), and the personal portion as No GST (no credit).

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Category 6: Overseas Transactions (Code: GST-Free or GST)

Overseas transactions may be GST-free or incur GST at the border, per ATO customs rules.

Examples of Overseas Sales (Code: GST-Free):

• Software development for a US corporate client.
• Export of manufactured goods to Asia (e.g., automotive parts).
• Online training course sold to an overseas corporation.
• International freight for exported machinery.
• Consulting services for a European retail chain.
• Export of mining equipment to Africa.
• Telehealth platform for overseas medical clients.
• Sale of agricultural products to a foreign buyer.
• Online legal services for an international law firm.
• Export of renewable energy technology (e.g., solar panels).

Examples of Overseas Purchases (Code: GST-Free or GST):

• GST-Free: Digital services from a US provider (e.g., cloud storage, AI tools).
• GST-Free: International shipping for imported goods (if GST not paid at border).
• GST-Paid: Imported machinery with GST paid at border (e.g., factory equipment).
• GST-Paid: Overseas consulting services with reverse charge GST applied.
• GST-Free: Overseas conference fees for a global business summit.
• GST-Free: International marketing research from a foreign firm.
• GST-Paid: Imported raw materials for manufacturing (GST paid at border).
• GST-Free: Overseas training program for executives.
• GST-Paid: Imported vehicles for a corporate fleet (GST paid at border).
• GST-Free: Subscription to an international industry journal.

GST Treatment:

• Sales: Code as GST-Free in Xero, include in G1 (Simpler BAS) or G1 and G2 (full reporting).
• Purchases (GST-Free): Code as GST-Free in Xero, no credit claimed.
• Purchases (GST-Paid): Code as GST in Xero, claim credit in 1B (Simpler BAS) or G10/G11 and 1B (full reporting).

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BAS Inputs: Reporting Overview

BAS inputs depend on your reporting method, with businesses using either Simpler BAS or full reporting, per ATO rules.

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What BAS Fields Do I Report Under Simpler BAS?

Question: I’m on Simpler BAS. What fields do I report?

Answer: Simpler BAS requires three fields, per ATO guidelines:

• G1 – Total Sales: All sales (taxable, GST-free, input-taxed, exempt).
• 1A – GST on Sales: GST collected on taxable sales.
• 1B – GST on Purchases: GST credits on business-related purchases.

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What About Full Reporting?

Question: I’m on full reporting. What fields do I report?

Answer: Full reporting requires seven fields, per ATO guidelines:

• G1 – Total Sales: All sales.
• G2 – Export Sales: GST-free exports.
• G3 – Other GST-Free Sales: Non-export GST-free sales.
• G10 – Capital Purchases: GST-inclusive capital items.
• G11 – Non-Capital Purchases: GST-inclusive operating expenses.
• 1A – GST on Sales: GST collected on taxable sales.
• 1B – GST on Purchases: GST credits on business purchases.

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Additional FAQs on GST Coding

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Can I Claim GST Credits on Entertainment Expenses?

Question: I spent money on a client dinner. Can I claim the GST?

Answer: Entertainment expenses may be subject to fringe benefits tax (FBT), restricting GST credits, per ATO rules. If FBT applies, code as No GST (no credit). If no FBT (e.g., minor benefit under the ATO threshold), code as GST and claim the credit in 1B.

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What If I Miss a BAS Deadline?

Question: I missed a BAS deadline. What happens?

Answer: Late lodgement incurs a penalty per BAS, escalating for repeated failures, per ATO 2025 rates. Persistent non-compliance may enforce monthly GST reporting, adding quarterly admin. “Lodge as soon as possible to minimise penalties,” advises the ATO.

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Tips for GST Compliance

• Use Software: Xero’s GST reports auto-calculate fields, per Xero’s BAS guide.
• Verify Invoices: Check ABNs via ABR.gov.au and ensure “tax invoice” wording, per TPB advice.
• Engage Professionals: BAS agents such as Scale Suite ensure accuracy for mixed supplies, per TPB recommendations.
• Monitor Reporting Needs: Ensure you’re using the appropriate BAS method (Simpler BAS or full reporting) based on your business’s GST complexity, per ATO rules.

Check out our free GST calculator here!

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Conclusion

This GST coding cheat-sheet simplifies bookkeeping for Australian businesses, ensuring accurate BAS reporting and ATO compliance. By categorising sales, purchases, and transactions with clear examples, you can confidently manage GST. Need help with GST compliance? Fill out our contact form for tailored finance, HR, and tech solutions.

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Frequently Asked Questions (FAQ)

1. What's the difference between Simpler BAS and full BAS reporting?

Simpler BAS is a streamlined method requiring only three fields (G1, 1A, 1B) and uses two GST categories ("GST" or "No GST"). Full reporting requires seven fields (G1, G2, G3, G10, G11, 1A, 1B) and is used by larger businesses or those with complex GST needs like frequent exports or input-taxed supplies.

2. How do I know if my sale is taxable, GST-free, or input-taxed?

Taxable sales attract 10% GST (most goods and services). GST-free sales don't charge GST but allow input tax credits (exports, basic food, medical equipment). Input-taxed sales don't charge GST and don't allow input tax credits (financial services, residential rent).

3. Can I claim GST credits on all business purchases?

You can claim GST credits on GST-inclusive business purchases if you have a valid tax invoice and the purchase is for business purposes. You cannot claim credits on GST-free purchases, personal expenses, or purchases related to input-taxed sales.

4. What makes a tax invoice valid for claiming GST credits?

For purchases over $82.50, a valid tax invoice must include the supplier's ABN, the words "tax invoice", GST amount or indication that GST is included, and other required details as per ATO guidelines.

5. How do I handle mixed-use purchases like a business mobile phone?

Mixed-use purchases must be apportioned based on business use percentage. Code the business portion as GST (claim credit for that portion), and the personal portion as No GST (no credit claimable).

6. Are overseas transactions subject to GST?

Overseas sales are typically GST-free (exports). Overseas purchases may be GST-free (digital services) or include GST if paid at the border. The treatment depends on the nature of the transaction and where GST is applied.

7. Can I claim GST on entertainment expenses?

Entertainment expenses may be subject to fringe benefits tax (FBT), which restricts GST credits. If FBT applies, code as No GST. If no FBT applies (minor benefits under ATO thresholds), code as GST and claim the credit.

8. What happens if I use the wrong GST code?

Incorrect GST coding can lead to overpaid GST, missed credits, or ATO penalties. It affects your BAS accuracy and can result in compliance issues. Always verify coding against ATO guidelines or consult a BAS agent.

9. How long must I keep GST records?

You must retain tax invoices and GST records for five years as per ATO requirements. This includes all supporting documentation for GST claims and BAS lodgements.

10. What's the penalty for missing a BAS deadline?

Late BAS lodgement incurs penalties that escalate for repeated failures. Persistent non-compliance may result in the ATO enforcing monthly GST reporting, increasing administrative burden.

11. Do I need to register for GST if I only make GST-free sales?

GST registration may still be beneficial even for GST-free sales because you can claim input tax credits on related business purchases. Consider voluntary registration if your turnover is below the $75,000 threshold.

12. How do I verify if a supplier's ABN is valid?

Check ABNs through ABR.gov.au (Australian Business Register) to ensure they're current and valid before claiming GST credits on purchases.

13. What's the difference between capital and non-capital purchases for BAS reporting?

Capital purchases (G10) are assets like machinery or equipment. Non-capital purchases (G11) are operating expenses like office supplies or services. This distinction only matters for full BAS reporting.

14. Can I change from Simpler BAS to full reporting?

Yes, you can change your BAS reporting method. Contact the ATO to discuss which method suits your business complexity and GST requirements.

15. What should I do if I'm unsure about GST treatment for a specific transaction?

When in doubt, consult the ATO website, speak with a registered BAS agent, or seek professional advice. Incorrect assumptions can lead to compliance issues and penalties.

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Scale Suite Services

Scale Suite provides comprehensive business services to help Australian enterprises navigate GST compliance and broader operational requirements.

BAS Agent and GST Compliance Services

Our registered BAS agents specialise in accurate GST coding, BAS preparation, and lodgement services. We help businesses determine appropriate reporting methods (Simpler BAS vs full reporting) and ensure correct treatment of complex transactions including mixed supplies and overseas dealings.

Bookkeeping and GST Management

We provide professional bookkeeping services with expertise in GST coding across all categories - taxable sales, GST-free transactions, input-taxed supplies, and business purchases. Our team maintains accurate records to support GST claims and ATO compliance requirements.

Accounting Software Implementation and Training

Scale Suite assists businesses in implementing and optimising accounting software like Xero for automated GST calculations and BAS reporting. We provide training on proper GST coding practices and help set up systems that integrate seamlessly with ATO requirements.

Business Advisory and Tax Planning

Our advisors help businesses understand GST implications for different transaction types, assess GST registration decisions, and develop compliance strategies. We provide guidance on complex areas like apportionment for mixed-use assets and overseas transaction treatments.

Compliance Monitoring and Support

We offer ongoing compliance monitoring to ensure businesses maintain accurate GST records, meet BAS deadlines, and avoid penalties. Our services include regular reviews of GST coding practices and proactive identification of potential compliance issues.

For detailed information about our services, visit www.scalesuite.com.au/services/finance

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This article is reviewed and updated on a periodic basis to ensure accuracy and compliance with current Australian taxation requirements. At the time of writing, all information presented has been assessed as current and accurate according to ATO guidelines and regulations.