• Four-year time limit for claiming GST credits for purchases

    Prior to 7.30 pm AEST on 12 May 2009 (the 2009 Federal Budget night), there was effectively no time limit on claiming GST credits for purchases that had not been taken into account either fully or partially in an earlier activity statement. A four-year time limit now applies to claiming all GST credits unless one of the exceptions applies. For more information, see Exceptions to the four-year time limit for GST credits.

    The four-year time limit for the claiming of a GST credit for a purchase ends four years from the due date of the activity statement for the earliest tax period in which you would have been able to claim the credit – setting aside any requirement to hold a valid tax invoice.

    If you account for GST on a cash basis, the earliest tax period in which you could claim a GST credit for a purchase would be the tax period in which you provide payment for your purchase.

    If you account for GST on a cash basis and you provide payment for a purchase in multiple tax periods, there will be more than one tax period that you will need to consider.

    For example, you may report GST monthly and pay for half of your purchase in the April 2010 tax period and for the other half in the May 2010 tax period. In this case, the earliest tax period in which you could account for the first half of your GST credit would be the April 2010 period and the earliest period in which you could account for the second half would be the May 2010 period. The four-year time limit for the first half of your credit would end four years from the due date of your activity statement for the April 2010 period (that is, 21 May 2014). The four-year time limit for the second half of your credit would end four years from the due date of your activity statement for the May 2010 period (that is, 21 June 2014).

    If you account for GST on a non-cash (accruals) basis, the earliest tax period in which you could claim a GST credit for a purchase would be the first tax period in which either:

    • an invoice for the purchase is issued
    • you provide part or all of the payment for your purchase.
    Attention

    Special accounting rules exist for certain purchases, such as purchases of second-hand goods, which may mean that the earliest tax period in which you would have been able to account for your purchase would be a different period to the period referred to above and that the four-year time limit may end on a different date to that noted above.

    End of attention

    Example 2

    Tim the tiler reports GST quarterly and accounts for GST on a cash basis. In May 2007, Tim pays in full for a purchase of tools. The earliest tax period in which Tim would be able claim the GST credit for his purchase (setting aside any requirement to hold a tax invoice) is the quarterly period that ends on 30 June 2007. The due date for the activity statement for this period is 28 July 2007. The four-year time limit for claiming the GST credit ends four years from this date (28 July 2011).

    Therefore, unless one of the exceptions applies, Tim needs to obtain a valid tax invoice (if he does not already have one) and claim the GST credit in an activity statement that he lodges before 28 July 2011. If he does not claim the credit before this time, and none of the exceptions apply, Tim will cease to be entitled to the credit.

    End of example
      Last modified: 27 May 2014QC 22778