Chapter 4

Working out your GST refund or payment

Working out GST is simple maths. Keeping track of all your transactions is the tricky part. Let’s learn the process.

A person on their phone calculating GST

GST is a simple formula

You work out GST by comparing the amount you paid on purchases to the amount you collected on sales.

You may need to make adjustments for assets, such as a car or computer, that is shared between your business and family. Visit the ATO page on adjusting GST to find out more.

How to work out GST in four steps

1. Make a note of the GST paid on your business purchases

2. Make a note of the GST collected on sales

3. Add both types of GST

4. Run the GST formula

Avoid nasty surprises with smart bookkeeping

Like any business, you’ll aim to sell more than you buy. If you succeed in doing that, you’ll most likely end up with a GST bill to pay. Run the four-step GST calculation regularly so you can:

  • work out how big your GST payment is shaping up to be
  • transfer cash to a separate bank account to cover the GST you’ll need to pay

Automate your GST calculations

You can use online accounting software like Xero to stay on top of GST. It automatically records GST collected and paid, and does the maths for you.

The software keeps a running count of your GST situation so you always know where you stand. When your business activity statement (including your GST return) is due, you just connect to the ATO and submit it online. All the information is ready to go.

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 content provided.

GST and BAS Guide For Business

Making a start with GST and BAS? Don’t worry. It’s a little extra admin, but this guide will help you get sorted.

  1. Registering for GST

    Here's the essentials of GST in Australia – including how to register for GST, calculate it, and report it.

  2. Calculating GST and issuing tax invoices

    If you’re a GST-registered business, you must add GST to your prices and issue GST invoices. Here’s how.

  3. 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.

  4. Working out your GST refund or payment

    Working out GST is simple maths. Keeping track of all your transactions is the tricky part. Let’s learn the process.

  5. What is BAS and how to lodge it

    GST-registered businesses declare how much they’ve collected and paid by completing a business activity statement (BAS).

  6. Tools and guides for your business

    Now you know the ins and outs of GST and BAS, but it can be tough to manage it all. Xero’s got the resources to help.

Download the GST Guide for Business

Get your GST sorted. Fill out the form to receive this guide as a PDF.

Start using Xero for free

Access Xero features for 30 days, then decide which plan best suits your business.