GST definitions
Some terms in our information about the goods and services tax (GST) may be unfamiliar to or have a specific meaning in GST law.
For the meaning of a particular GST term, see below.
GST terms
Acquisition
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Activity statement
Activity statements are used to report your business tax entitlements and obligations for a reporting period. This includes GST, pay as you go (PAYG) instalments, PAYG withholdings and fringe benefits tax instalments.
Aggregated turnover
Aggregated turnover is your business turnover plus the turnover of closely associated entities.
AUSid
An AUSid is a secure login credential that non-residents use to access Australian Government online services.
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Australia
When we say Australia, we mean the term indirect tax zone.
Australian business number
An Australian business number (ABN) is a publicly available identifier for your dealings with us and other government departments and agencies. It's shown in the Australian Business Register (ABR), which enables you to search for an ABN using the ABN lookup tool.
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Australian consumer
Two elements must be met for a purchaser to be an Australian consumer of imported services and digital products. They are the:
- residency element
- consumer element.
You can work out the purchaser’s residency by:
- using information about the purchaser from your business systems
- taking reasonable steps to get information about the purchaser.
After confirming the purchaser is an Australian resident, you need to work out if they're a consumer. A purchaser is a consumer if they are:
- not a business registered for Australian GST
- registered for Australian GST but don't purchase the imported services or digital products to use in their business.
You can treat a supply as not made to an Australian consumer if you have:
- gathered enough evidence
- reasonably believe the purchaser isn't an Australian consumer.
See also:
- GSTR 2017/1 Goods and services tax: making cross-border supplies to Australian consumers
Australian GST-registered business
Australian GST-registered businesses can be identified by:
- providing their Australian business number (ABN)
- searching their ABN on the ABN LookupExternal Link tool
- telling you they are registered for GST.
Businesses can integrate ABN Lookup validation into their system.
See also:
- GSTR 2017/1: Goods and services tax: making cross-border supplies to Australian consumers.
Business activity statement (BAS)
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Business asset
A business asset is something used for your business, for example, manufacturing equipment, a delivery van or office computer. Intangible items, such as goodwill, may also be business assets.
You generally incur a GST liability when you sell a business asset.
Business (enterprise)
An enterprise includes a business as well as:
- commercial activities
- activities of entities such as charities
- deductible gift recipients
- religious and government organisations
- certain non-profit organisations.
It doesn't include:
- private recreational pursuits and hobbies
- activities carried on as an employee, labour-hire worker, director or office holder
- activities carried on by individuals (other than trustees of charitable funds) or partnerships (all or most of the partners are individuals) without a reasonable expectation of profit.
See also:
- MT 2006/1The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian business number
Consideration
See also:
Consumer
Consumers are:
- not registered for Australian GST
- registered for Australian GST but don't purchase goods for business use
GST doesn't apply to sales of low value imported goods if you have both
- your customer's Australian business number (ABN)
- a statement or other information saying they are registered for GST.
Enterprise
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Financial acquisition
A financial acquisition is an acquisition relating to making a financial supply (other than a borrowing).
Financial acquisitions threshold
The purpose of the financial acquisitions threshold is to allow entities that make relatively small amounts of financial supplies (compared to their taxable supplies or GST-free supplies) to claim full GST credits relating to those financial acquisitions.
If you make financial supplies without exceeding the financial acquisitions threshold you can claim GST credits for your purchases related to making those financial supplies (providing you have a tax invoice). For example, you make both financial supplies and other sales and your financial supplies are only a small part of your total sales
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Financial supplies
Financial supplies are input taxed provided certain requirements are met. A financial supply is the provision, acquisition or disposal of an interest listed in the GST regulations.
Examples include:
- lending or borrowing money
- buying or selling shares or other securities
- creating, transferring, assigning or receiving an interest in, or a right under a super fund.
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Government related entity
A government related entity (GRE) includes government departments, government owned corporations and statutory bodies.
GST credits (input tax credits)
You can claim a credit for GST included in the price of goods or services (the inputs) you buy for use in your business, unless you use the purchase to make input-taxed sales.
If you use a purchase for both business and private purposes, you can only claim a credit for the amount of GST relating to the business use.
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GST-free sales
Some goods and services aren't subject to GST and are sold without GST in their price. These sales are referred to as GST-free sales.
Examples of GST-free sales include basic food, exports, sewerage and water, the sale of a business as a going concern, non-commercial activities of charities, and most education and health services.
If you sell GST-free goods or services, you can claim the GST included in the price of your inputs (the goods or services used to make the goods or services sold).
The term GST-free is similar to:
- zero rated (in other countries with VAT/GST systems)
- exempt (in countries with sales tax systems).
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GST turnover
GST turnover is mainly the turnover figure you use to work out if you need to be registered for GST.
GST turnover is also used for other administrative decisions within the GST Act and other tax laws.
GST turnover is generally the total of the sales you have made (or are likely to make) in a 12-month period.
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GST turnover threshold
GST turnover thresholds are used to work out if you:
- must register for GST
- must report GST monthly
- can report and pay GST annually
- can choose to account on a cash basis
- can make an annual private apportionment election
- must lodge GST returns and pay GST electronically
- can choose to pay GST by instalments.
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Imported services and digital products
Imported services and digital products are also known as inbound intangible consumer supplies.
Examples of imported services and digital products include:
- supplies of digital content such as e-books, movies, TV shows, music and online newspaper subscriptions
- online supplies of games, apps, software and software maintenance
- webinars or distance learning courses
- insurance services
- gambling services
- online dating services
- booking services for events or places within Australia (such as hotel accommodation or sports events)
- website design or publishing services
- professional association services (ie membership fees)
- legal, accounting, architectural or consultancy services.
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Inbound intangible consumer sale (supply)
'Inbound intangible consumer supply' means sales of anything other than goods or real property to an Australian consumer (for example, digital products and other services) that are:
- made to an Australian consumer
- not wholly done in Australia or through an enterprise (business) run in Australia.
Indirect tax zone
'Indirect tax zone' means Australia. It doesn't include external territories and certain offshore areas.
The goods and services tax (GST), the wine equalisation tax (WET) and the luxury car tax (LCT) operate in the indirect tax zone. The GST, WET and LCT don't apply to Australian external territories and certain offshore areas.
See also:
- GSTR 2006/9 Goods and services tax: supplies
- GSTR 2018/1 Goods and services tax: supplies of real property connected with the indirect tax zone (Australia)
- GSTR 2018/2 Goods and services tax: supplies of goods connected with the indirect tax zone (Australia)
- GSTR 2019/1 Goods and services tax: supply of anything other than goods or real property connected with the indirect tax zone (Australia)
Inputs
The goods or services used in a business to make goods or services sold are referred to as 'inputs'.
Input tax credits
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Input-taxed sales
Some goods and services are sold without GST in their price, even though GST was included in the price of the inputs used to make or supply them. These sales are referred to as input-taxed sales.
If you make an input-taxed sale you're not entitled to credits for the GST in the price of your inputs (the goods or services used to make the goods or services sold).
Two of the most common types of input-taxed sales are:
- financial sales (supplies)
- supplies of residential premises for rent or sale.
In special cases, you may be entitled to a GST credit for a purchase relating to making financial supplies.
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Limited registration entity (LRE)
Non-residents may choose to be a limited registration entity (LRE) for GST purposes if they make, or intend to make, one or more:
- inbound intangible consumer sale
- offshore supplies of low value imported goods.
LREs aren't entitled to GST credits for purchases and must lodge online GST returns quarterly.
Low value imported goods (LVIG)
Low value goods are goods (except for tobacco products or alcoholic beverages) with a customs value of A$1,000 or less when the price is first agreed with the customer.
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Margin scheme
The margin scheme is an option that can be used when making a taxable sale of property.
You can't claim GST credits for purchases made under the margin scheme even if you have paid GST on the margin.
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Merchant
The term 'merchant' means a seller of goods. We also use the term 'supplier' because, for GST purposes, an electronic distribution platform operator or re-deliverer can be treated as the supplier.
We genreally use 'merchant' in relation to low value imported goods.
Non-resident entity
A non-resident entity is not a resident of Australia for Australian income tax purposes.
Payment (consideration)
Payment for GST purposes is anything you receive for providing goods, services or anything else. Payment is usually money but can be in the form of other goods or services such as barter transactions. Payment may also be made by way of refraining from doing something.
Property (real property)
Property includes:
- an interest or right over land
- a personal right to call for or be granted any interest in or right over land
- a licence to occupy land or any other contractual right exercisable over or in relation to land.
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Purchase (acquisition)
For GST, a purchase or acquisition includes the acquisition of goods or services such as trading stock, a lease, consumables and imports.
Real property
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Recipient-created tax invoices (RCTI)
In most cases, tax invoices are issued by suppliers.
In some cases, purchasers or recipients, rather than suppliers, of the goods or services, may issue a tax invoice. This is known as a recipient-created tax invoice (RCTI).
Find out more:
Re-deliverers
A re-deliverer (forwarder) acts as a go-between when overseas merchants don't normally ship goods to Australia. They collect, accept delivery of, or purchase overseas goods on behalf of consumers based in Australia.
You are a re-deliverer if you assist in getting goods to Australia by providing:
- an offshore mailbox service with an address outside Australia where goods are delivered
- a shopping service that buys or helps to buy goods outside Australia as an agent of a recipient.
If a merchant or EDP operator assists in getting goods to Australia, they are responsible for GST instead of you.
Transporters aren't usually re-deliverers.
If you buy and resell goods, you are a merchant not a re-deliverer.
Reduced-credit acquisitions
Reduced-credit acquisitions are purchases (acquisitions) of some things relating to making input-taxed financial supplies.
You can claim reduced GST credits on reduced-credit acquisitions. The reduced GST credit is generally 75% of the full GST credit that you would otherwise be entitled to.
In some instances, related to recognised trust schemes, the reduced credit is 55% of the full GST credit.
Sale of a business as a going concern
A business is sold as a going concern if:
- all things required for continuing operating the enterprise are supplied to the buyer
- the supplier carries on the enterprise until it's sold.
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Sales (supplies)
For GST a sale or supply includes:
- a sale of goods or services
- a lease of premises
- hire of equipment
- providing advice
- exporting goods.
A sale can be any of the following:
- taxable
- input-taxed
- GST-free.
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Self-assessment
The self-assessment system for indirect taxes began on 1 July 2012. When lodging activity statements or GST return for tax periods that begin on or after that date, you must include the indirect tax payable amounts and any credits that make up your net amount.
We make an assessment based on the net amount on the day you lodge the return is treated as a notice of assessment.
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Supplies
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Taxable sales
Sales of goods and services that must have GST included in their price are referred to as taxable sales.
You make a taxable sale if you are registered, or required to be registered, for GST and:
- you make sales for payment
- you make sales in the course of a business (enterprise)
- the sale is connected with Australia.
When making taxable sales you must include GST in the price. You're entitled to claim credits for the GST in the price of your inputs (the goods or services used to make the goods or services you sold).
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Tax invoice
A tax invoice is a document generally issued by the seller. It shows the price of a sale and indicates if it includes GST and may show the amount of GST.
You must have a tax invoice before claiming GST credits on your activity statements for purchases of more than $82.50 (including GST).
See also:
- Tax invoices
- GSTR 2013/1 Goods and services tax: tax invoices
- GSTR 2001/7 Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover
Tax period
For GST purposes a tax period may be a month, a quarter or a year and refers to how frequently you lodge your activity statements.
You
When we refer to 'you', we mean you as a business. For example, a sole trader, a partnership, a trustee (of a trust or a superannuation fund), or a company.
GST law definitions of terms you may be unfamiliar with.