How to Claim GST Credits (Input Tax Credits) in Australia 2026
Claiming GST credits (also called input tax credits) on your business purchases is one of the biggest financial benefits of being registered for GST in Australia. This guide explains exactly what qualifies, how to calculate your credits, and how to report them correctly.
What Are GST Input Tax Credits?
When you buy something for your business and pay GST on it, the ATO allows you to claim that GST back โ this is called an input tax credit (also known as a GST credit). It reduces the amount of net GST you pay to the ATO.
Net GST = GST Collected on Sales (1A) โ GST Credits on Purchases (1B)
What Purchases Qualify for GST Credits?
To claim a GST credit, ALL four conditions must be met:
- You are registered for GST
- The purchase is for a creditable purpose (business, not private)
- The purchase included GST (supplier was GST-registered)
- You hold a valid tax invoice (for purchases over $82.50)
Common qualifying business purchases:
- Office supplies, stationery and equipment
- Business software subscriptions
- Marketing and advertising
- Professional services (accounting, legal)
- Business travel and accommodation
- Work tools and machinery
- Business vehicle expenses (not private use portion)
- Phone and internet (business portion)
What Does NOT Qualify for GST Credits?
| Purchase | Creditable? | Reason |
|---|---|---|
| Office laptop (100% business) | โ Full credit | Fully creditable |
| Phone (50% business, 50% private) | 50% credit | Apportion business portion |
| Groceries (personal) | โ No credit | Private expense |
| Fresh food (GST-free) | โ No credit | No GST was charged |
| Business lunch (entertainment) | โ Restricted | Entertainment rules apply |
| Work vehicle (business use) | โ Business % | Apportion private use |
How to Calculate Your GST Credits
Method 1: GST Credit = Purchase Price รท 11
Method 2: GST Credit = Purchase Price ร (10/110)
Gather all tax invoices for the BAS period
Collect all receipts and invoices for business purchases during the quarter.
Identify creditable purchases
Separate business purchases from private ones. Calculate the business portion for mixed-use items.
Calculate total GST paid
Divide total creditable purchases (inc. GST) by 11 to get total GST credits claimable.
Enter in Box 1B on your BAS
Report your total GST credits in Box 1B of your Business Activity Statement.
How to Claim GST Credits on Your BAS
GST credits are reported in Box 1B on your BAS. The ATO deducts this from your GST collected (Box 1A) to calculate your net GST:
Box G10: Total purchases (including those with GST)
Box G11: Total purchases without GST credits
Box 1B: Total GST credits (= G10 GST รท 11)
Record-Keeping Requirements
The ATO requires you to keep records supporting your GST credit claims for 5 years from the date of the relevant transaction. For purchases over $82.50, you must hold a valid tax invoice showing:
- The words "Tax Invoice"
- The supplier's ABN
- The date of issue
- A description of the goods or services
- The GST amount or statement that the total includes GST
Pro Tips for Maximising GST Credits
- Use accounting software to automatically track and categorise GST credits
- Ask suppliers to re-issue correct tax invoices if they're incomplete
- For mixed-use assets, document your business-use percentage and apply it consistently
- Don't forget to claim credits on bank charges, merchant fees and subscription renewals
- If you missed claiming credits in a previous BAS, you can claim them in a later period (up to 4 years)
Input tax credits directly reduce your GST liability. For every $1,100 you spend on GST-included business purchases, you can claim $100 back from the ATO. Keep all tax invoices, apportion mixed-use items honestly, and report in Box 1B of your BAS every quarter.