Everyone is aware of the goods and services tax (GST), which is a tax of 10% on most services, goods and other items consumed or sold in Australia. There are a few things on which GST is not applied, and these are known as GST-free sales. In today’s blog, we’ll discuss what GST credits are, when you can claim them and the rules for specific GST credit claims. Let’s get started:

What are GST Credits?

As a business owner, you are liable to claim a credit for any GST included in the cost of any goods and services you purchase for your business. This is known as GST credit. Apart from this, you can hire a tax accountant to help you claim GST credit if you don’t know how to claim it. You can also search for ‘accountant near me’ if you don’t have a tax accountant to manage your business taxes.

When you can Claim a GST Credit?

You are able to claim a GST credit for any GST included in the cost you pay for goods and services you use for your business. This is known as an input tax credit or a GST credit. If you want to claim GST credits in your BAS, then you must be registered for GST.

You can claim GST credits if:

  • You are likely to use your purchase solely or partially for your business, and your purchase shouldn’t be related to making input-taxed supplies
  • The cost included GST
  • You give or are subject to pay for the item you bought
  • You have a tax invoice from your supplier

When claiming GST credits, ensure your suppliers are registered for GST. Despite this, if you are not aware of GST credits, then you can ask a tax accountant. If you haven’t hired a tax accountant, then you can search online near your town by searching ‘tax accountant near me.’

GST and Acquisition for Private Use

If you buy services or goods for both business and private use, you will be liable to claim GST credit for the portion of the acquisition relating to business use. You may have to manage the cost of GST credits you have claimed if you later find that your actual use is different from your intended use. Being a small business owner, you may account for the private use of your business purchase once a year rather than every time you file or lodge an activity statement. In addition to this, when you opt for accounting services for your business, and then your accountant will help throughout this process.

Rules for Claiming Specific GST Credits

Special rules for claiming GST credits are liable to specific types of purchase, including:

  • Pre-Establishment Costs
    If you are starting a new company, the company is subject to claim GST credits for the GST included in the cost of some acquisitions you make before the business comes into existence, such as business registration, set up fees, trading stock and business premises.To claim GST credits for these pre-establishment costs, given below rules must be followed:
  • You must not be eligible to claim a GST credit for the purchase
  • You must become an officer, member, or employee of the company
  • The company should have completely reimbursed you for the amount of the purchase
  • The company must be registered for GST and come into existence no more than six months after the purchase
  • The purchase must be made to bring the company into existence 
  • Second-Hand Goods
    You are entitled to claim a GST credit for any second-hand goods you purchase from unregistered suppliers for sale or exchange.
  • Other Special Rules 

    There are various other special rules for claiming GST credits. They include:

  • Progressive or periodic supplies, such as service contracts or lease payments
  • Making a purchase with corporate credit cards
  • Land purchase under standard land contracts
  • Supplies of electricity and gas by public utility providers
  • Lay-by purchases

Additionally, when you hire a professional tax return accountant for your company, then you can be sure that you will save money on taxes. Accountants are experts in preparing and filing tax returns for your business, so you don’t need to worry about taxes during tax season.

Now, you have an idea of what exactly GST credit is and when you can claim it. The blog also shares some rules for claiming GST credits. Apart from this, if you are looking for a professional and experienced accountant, then you can reach Accounting Firm in Melbourne.

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