Chapter 4

Claiming back GST (and input tax credits)

GST-registered businesses can claim back the GST they pay on business expenses. Let’s learn how to claim it.

Money changing hands

When you can claim GST back

You can claim GST back when:

  • you’ve purchased goods or services for your business (these are called input tax credits)
  • a customer leaves you with a bad debt

GST tax credits for business expenses

When you buy something for your business, you’re usually charged GST. If you’re registered for GST, you can claim that back. You do this by claiming a GST tax credit when lodging your business activity statement (BAS). The ATO will balance those credits against the GST you owe when working out your refund or bill (learn more in working out your GST).

When expenses are split between business and home

If you bought something for both your business and for private use, you can claim a GST credit for the business portion.

When you’re not collecting any GST

You can claim back GST on supplies even if the end product or service that you sell is GST free.

Claiming back GST on a bad debt

If you account for GST on an accrual basis, you can sometimes get caught out by a bad debt. For example you might raise an invoice and pay GST on the expected income then find your customer doesn’t pay you.

Don’t worry, you may be able to claim back the GST from the ATO on your next return. If the customer pays later, you will repay the GST then.

Disclaimer: Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.

Guide to GST & BAS

Making a start with GST and BAS? Don’t worry. It’s a little extra admin, but follow our guide to get on top of it.

Download the guide to GST

Get your small business tax sorted. Fill in your details to get our full GST guide as a PDF.

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