Claiming Input Tax Credits (GST Credits) in Australia
How it works
An input tax credit (ITC) is the GST included in the price of something you buy for your business. If you're GST-registered, you can generally claim back this GST on your BAS, reducing the amount you owe the ATO — or increasing your refund. The ATO uses four conditions to determine eligibility: you must be registered for GST, the purchase must be for a creditable purpose (business use, not private), the supplier must have actually charged GST, and you must have a tax invoice (for purchases over $82.50).
The most common complication is mixed-use purchases — things used partly for business and partly for personal purposes. For these, you can only claim the business-use proportion of the GST. If you buy a $2,200 laptop and use it 60% for business, you claim 60% of the $200 GST = $120. The ATO expects you to have a reasonable basis for the apportionment — keeping a logbook or diary of use patterns is the standard approach.
The other major restriction is purchases related to making input-taxed supplies. If your business makes only input-taxed sales (residential rent, financial services), you generally cannot claim any input tax credits. If you make a mix of taxable and input-taxed sales, you need to apportion your credits. Businesses with less than $50,000 of input-taxed acquisitions and where those acquisitions are less than 10% of total acquisitions can use a simplified method — otherwise you need a formal apportionment calculation each BAS period.
When to use this calculator
- You've just made a business purchase and want to confirm you can claim the GST back before lodging your BAS
- You're unsure if a purchase qualifies because it's partly for private use and you need to understand apportionment
- You want to check if a purchase related to residential property or financial services is claimable (it usually isn't)
- You're a new business owner learning the basic rules for GST credits before your first BAS lodgement
- You need to understand when a tax invoice is required vs when simplified records are enough
Key concepts
- Creditable purpose
- A purchase has a creditable purpose if it's for use in your business to make taxable or GST-free sales. Purchases for private use, or solely for making input-taxed sales, are not creditable. Mixed-use purchases are partially creditable — you claim the business-use proportion.
- Tax invoice requirement
- For purchases over $82.50 (inc-GST), you must hold a valid tax invoice to claim the credit. The invoice must show the supplier's ABN, the words 'tax invoice', date, description of items, GST amount, and total price. For purchases of $82.50 or less, you can claim based on other records (EFTPOS receipt, bank statement) without a formal tax invoice.
- Input-taxed acquisitions
- Purchases you make that relate to input-taxed sales (residential rent, financial services, life insurance). You generally cannot claim GST credits on these. If you earn a mix of taxable and input-taxed income, you need to apportion your credits. The de minimis rule lets you skip apportionment if input-taxed acquisitions are under $50,000 and less than 10% of total acquisitions.
- Four-year time limit
- You can claim an input tax credit up to four years after the end of the tax period in which you were entitled to the credit. So if you forgot to claim GST on a purchase from October 2022, you have until the end of the October 2026 BAS period to claim it. After four years, the credit expires and cannot be recovered.
Worked example — GST credits for a small accounting firm
Rachel runs a small accounting practice. She's GST-registered and provides a mix of taxable services (accounting, tax returns) and some input-taxed supplies (arranging finance for clients). Here are her purchases for the quarter:
| Purchase | Amount (inc-GST) | GST | Creditable? | Claimable GST |
|---|---|---|---|---|
| Office rent | $5,500 | $500 | Yes — relates to taxable services | $500.00 |
| Accounting software | $330 | $30 | Yes — 100% business use | $30.00 |
| New laptop | $2,750 | $250 | Partial — 80% business use | $200.00 |
| Client entertainment | $440 | $40 | No — entertainment is blocked | $0.00 |
| Mobile phone plan | $110 | $10 | Partial — 70% business use | $7.00 |
| Finance brokerage training | $1,100 | $100 | No — relates to input-taxed activity | $0.00 |
| Summary | Amount |
|---|---|
| Total GST on purchases | $930.00 |
| Blocked (entertainment) | −$40.00 |
| Blocked (input-taxed related) | −$100.00 |
| Private use adjustment | −$73.00 |
| Claimable at BAS label 1B | $737.00 |
Rachel cannot claim the entertainment GST (entertainment is specifically blocked by the GST Act regardless of business purpose). The finance training relates to her input-taxed activity, so that GST is not creditable either. The laptop and phone are apportioned based on business use. Her total claim at label 1B is $737.00.