GST-Free/Input Taxed

You pay GST on taxable supplies that you make unless that supply is GST-free or input-taxed. If you make a supply that is GST-free, there is no GST payable on that supply (that is, you do not have to pay GST to the Australian Taxation Office when you make a GST-free supply).

 

In contrast to input-taxed supplies, an acquisition or importation that you make which relates to making those GST-free supplies may be a creditable acquisition or a creditable importation. This means you are entitled to claim an input tax credit if all the other requirements for making a creditable acquisition or creditable importation are met.

 

A supply that could be both input-taxed and GST-free is a GST-free supply.

 

Broadly, the following are examples of GST-free supplies:

 

> most health and medical care services

 

> most educational services

 

> most food for human consumption (other than prepared foods, confectionary, snacks, ice-cream, biscuits, alcohol, soft-drinks and certain other drinks)

 

> certain activities of charities and related bodies

 

> international travel and transport

 

> sales of ‘going concerns’

 

> certain dealings with land, and

 

> exports of goods or services or other things if certain requirements are met.

 

 

You pay GST on taxable supplies that you make unless that supply is GST-free or input-taxed. If you make a supply that is input-taxed, there is no GST payable on that supply (that is, you do not have to pay GST to the Australian Taxation Office when you make an input-taxed supply).

 

However, in contrast to taxable and GST-free supplies, an acquisition or importation that you make is not creditable to the extent that it relates to making those input-taxed supplies (other than input-taxed supplies made through an enterprise that you carry on outside Australia or certain financial supplies). To the extent that it is not creditable you are not entitled to an input tax credit for GST paid on the acquisition or importation.

 

A supply that could be both input-taxed and GST-free is a GST-free supply.

 

Broadly, the following are examples of supplies that are input-taxed:

 

> financial supplies

 

> supplies of private residential premises for rent (even if used as business premises)

 

> certain transactions involving precious metals, and

 

> certain other supplies where the supplier elects for those supplies to be treated as input-taxed.

 

 

Please note that this list is not comprehensive.  If you are aware of any others that you come across commonly when preparing/reviewing BAS returns please let us know and we shall add them.  Thanks.

> Accommodation with a residential lease (exclusive occupancy rather than a mere right to use the premises)

> ASIC fees

> ATO annual levy for SMSF’s

> ATO tax payments

> Bank fees - monthly, annual, cheque books, dishonour, loan setup

> Body Corporate Levies (depends on whether they are registered for GST or not)

> Business sold as a going concern

> Coffee, coffee essence, chickory, chickory essence and malt to make a beverage

NB! GST is charged on Coffee, made ready to drink and coffee whitener

> Credit card annual fees (GSTR 2002/2)

> Credit card repayments

NB! GST is charged on Credit Card Merchant Fees

> Council Rates and Waste Collection Services

> Distributions by trusts to beneficiaries

> Dividends paid

> Donations to tax deductible gift recipients

> Education (most)

> Food for humans (fresh)

> Health insurance premiums

> Health services (most)

> Hire purchase repayments (new rules from 1 July 2012 – See links below)

> Insurance premiums - Business Expense Cover based on Life insured of key person

> Insurance premiums - Health

> Insurance Premiums - Income Protection

> Insurance premiums - Stamp Duty Component

> Interest paid

> International postage

> International travel and transport

> Land tax

> Loan repayments

> Local government rates (including water and sewerage rates and charges)

> MCIS levy paid as part of the compulsory 3rd party personal injury insurance component of motor vehicle registration fees

> Medical insurance premiums

> Medical services (most)

> Motor Vehicle Registration

> Motor Vehicles with a purchase price in excess of the luxury car limit have a cap on the GST that can be claimed

> Payments to suppliers who have not registered for GST (e.g. because they are below the turnover threshold)

> Prescription drugs

> Registration certificate for a motor vehicle

> Rent for private residential premises even if used as business premises (exclusive occupancy - lease) - excludes mere right to occupy. 

> Security deposit (see ATO definition of a security deposit below)

> Security deposits forfeited are subject to GST

   (Reliance Carpet case was overturned by High Court – May 2008)

> Stamp Duty - often insurance policies and leases have a stamp duty component.

> Strata levies (depends on whether they are registered for GST or not)

> Superannuation contributions

> Tax Agents Registration Fees (Tax Practitioner Board)

> Tea (bags, loose, instant)

NB! GST is charged on  Tea, made ready to drink and tea with a recommended dosage. It is considered a medicinal preparation.

> Travel Overseas from Australia

> Wages

> Water Rates