GST analytical tool guidance

This Guidance should be read in conjunction with the following documents: GST Analytical Tool – Top 100 Example, GST Analytical Tool – Top 1000 Example and GST Analytical Tool – frequently asked questions

6 August 2025

1. Overview

Our expectation is that all large corporate taxpayers in the Top 100 and Top 1,000 Programs, subject to assurance reviews (except those whose business is predominantly input taxed) will implement and have documented procedures for an annual reconciliation process between their financial statements and business activity statements (BAS), as per the GST Governance, Data Testing and Transaction Testing Guide.

We have developed the GST analytical tool (GAT) as such a reconciliation process to help us better understand variances between accounting and GST figures. The GAT reconciliation process is one of the 4 pillars of the justified trust methodology that we use to obtain greater assurance that you are paying the right amount of GST. This Guide assists with completing the GAT.

When to use the GST analytical tool

All taxpayers in the Top 100 or Top 1,000 program are required to apply the GAT as part of an assurance review (except those whose business is predominantly input taxed). The GAT is an essential element of the justified trust methodology and is a core requirement for periods under review by the ATO.

For taxpayers who have had a GST assurance review, the Supplementary annual GST return (SAGR) includes questions about whether this reconciliation has been undertaken and the outcomes - for more information, see Supplementary annual GST return.

The use of the GAT does not apply to taxpayers with predominantly input taxed supplies. We are currently not applying the GAT methodology to financial institutions.

Where your business has a mix of taxable and input taxed supplies, we will work with you to apply the GAT during an assurance review.

This methodology will apply as follows to taxpayers who conduct their business as a joint venture (JV):

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The GAT methodology needs to be applied to all the corporate GST groups and incorporated JV groups within the scope of the overall GST assurance review.

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The GAT methodology will be applied to incorporated JVs just as it applies to any other corporate GST group.

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The GAT methodology will not be applied to an unincorporated JV (UJV).

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Instead of applying the GAT to UJVs, we will need to conduct up to 12 months of data testing for the UJV GST groups within the scope of the overall GST assurance review.

Role of the GST analytical tool

The GST analytical tool uses a standard method statement applying a 'top down' approach to identify and understand variances between accounting figures reported in audited financial statements and GST reported on a BAS.

The GAT is a useful tool for taxpayers to check how their various streams of economic activity are treated for GST purposes and have confidence in relation to their GST outcomes.

The application of the GAT is an important component in respect of assuring the GST outcomes of taxpayers in the Top 100 and Top 1,000 GST assurance reviews and helps to drive the work program and areas of focus across assurance reviews. This is because identifying the key variances between accounting and tax helps us understand the various streams of economic activity of a taxpayer and how they are treated for tax purposes. This assists in identifying areas of focus to be examined as part of the broader assurance review such as a systems walkthrough, transactional testing and data testing.

The method statement starts with the revenue and expenses reported in your profit and loss statement. It works through a series of adjustments to compare with the annualised BAS covering your financial reporting year.

We seek to understand what parts of your accounting reported revenue represent:

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taxable supplies

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GST-free supplies

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input taxed supplies

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transactions that are not supplies for GST purposes (out-of-scope supplies).

We seek to understand what parts of your accounting reported expenses represent:

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GST-bearing expenses

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non-GST-bearing expenses.

In addition, there are manual adjustments which may impact GST outcomes.

Key steps

The 4 key steps to the GAT are the analysis or reconciliation of:

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grouping variances

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profit and loss statement adjustments (non-GST bearing items)

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capital and balance sheet adjustments

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other adjustments (offsetting items or industry-specific).

2. Method statement

3. Definitions

Table 2 contains a list of definitions of terms used throughout this Guide.

4. Steps to the method statement

Starting point – total revenue or total expenses for accounting group as per statutory profit and loss statement

The starting point for both revenue and expense approaches should be the aggregate of revenue or expenses respectively as reported in the profit and loss statement of the audited financial statements.

However, there may be instances where due to different consolidation rules for accounting and GST groups, aggregate revenue and expense figures from different sources may be used (for example, trial balances or consolidation workpapers that sit under the audited consolidated financial statements). In that case, when under review, it is important to liaise with the appropriate ATO case team to gain clarity on approaches used.

When an accounting group is larger than the GST group, the accounting group data can be used as the starting point. Adjustments will need to be made (as shown in Step 1) to eliminate non-GST group entities.

When multiple accounting groups make up a single GST group, it will be necessary to aggregate the revenue and expense results of the respective accounting groups to derive a single starting point for revenue and expenses for the GST group.

Step 1 – reconciliation between statutory accounting group and GST group

The statutory accounting group and the GST group may differ significantly. Step 1 is designed to ensure that we are comparing like-for-like groups.

As each taxpayer's grouping structure differs significantly, we cannot prescribe a standard approach, however our preferred approaches are listed as follows.

Accounting group is larger than GST group

If the accounting group is larger than the GST group:

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remove revenue and expenses attributable to entities within the accounting group but not within the GST group (add back intragroup transactions between GST group and non-GST group entities)

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aggregate GST data to match accounting group (remove GST-bearing intragroup transactions)

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eliminate revenue and expenses of foreign operations

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eliminate dormant or insignificant entities

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eliminate transactions related to JVs.

GST group is larger than accounting group

If the GST group is larger than the accounting group:

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remove revenue and expenses (if necessary) attributable to entities that are not within the GST group but are in the accounting group – for example, a large accounting group contains a GST group plus other entities, but the GST group includes entities outside the accounting group as well

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remove intragroup transactions (add back transactions between accounting group and non-accounting group entities)

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eliminate revenue and expense of foreign operations (if required)

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eliminate dormant or insignificant entities

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eliminate transactions related to JV's.

Step 2 – profit and loss statement adjustments

Step 2 focuses on identifying non-GST bearing revenue or expense items, some of which are reported in the profit and loss statement.

The following lists the most common non-GST bearing revenue or expense adjustments, noting that there may be other adjustments required for this step.

Revenue

Revenue adjustments may include the following:

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offshore income or exports

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GST-free sales

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interest, dividend, investment or other financing income

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other input taxed income

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foreign exchange gains.

Expenses

Expense adjustments may include the following:

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payroll or personnel expenses^[3]

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depreciation and amortisation

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investment and financing costs

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private, domestic, non-deductible or other expenses without GST in the price

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foreign exchange losses

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impairment cost of assets.

Step 3 – capital and balance sheet adjustments

Step 3 focuses on including GST-bearing revenue or expense items on which there are differences between the timing of recognition of the item for GST and financial reporting.

Sources of information include the balance sheet or cash flow statement. The following lists common expected adjustments, noting that there may be other adjustments required for this step.

Revenue

Revenue adjustments may include the following:

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sales of capital or fixed assets

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deferred or unearned revenue

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accrued revenue.

Expenses

Expense adjustments may include the following:

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purchase of capital or fixed assets

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prepayments and accrued expenses

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difference between stock purchases and cost of goods sold

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provisions created.

Step 4 – other adjustments

Step 4 focuses on converting accounting figures reported on a net basis to gross figures to align with GST reporting. It also aims to adjust for any contra items reported in financial statements.

If there are any other industry-specific adjustment items, they should be reported within this step.

The following lists the common expected adjustments.

Revenue

Revenue adjustments may include the following:

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rebates, discounts or incentives offset against sales

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rebates, discounts or incentives received (resulting in an increase in GST payable)

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removal of GST-bearing negative revenue

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addback of GST-bearing negative expenses

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removal of JV cutbacks.

Expenses

Expense adjustments may include the following:

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rebates, discounts or incentives paid (resulting in an increase in GST credits)

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rebates, discounts or incentives received (resulting in a reduction in GST credits)

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removal of GST-bearing negative expenses

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addback of GST-bearing negative revenue

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removal of JV cutbacks.

Calculation

The figures derived using the following formulas are also used for GAT disclosures in the SAGR. The formula for calculating the effective GST rate on GST payable is:

GST collected (BAS Label 1A) ÷ adjusted revenue (after applying method statement steps)


The formula for calculating the effective GST rate on GST claimable is:

GST claimed (BAS Label 1B) ÷ adjusted expenses (after applying method statement steps).


The formula for calculating the net effective GST rate^[4] is:

Net GST position ÷ adjusted net profit.


Where:

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Net GST position = BAS Label 1A – BAS Label 1B

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Adjusted net profit = adjusted revenue – adjusted expenses.

Preliminary analysis

Once all steps of the method statement are complete, as part of a review, we will assess whether we understand and can explain the variances between your financial statements and your BAS results and whether those variances are supported by appropriate evidence.

We may ask you to provide more information where:

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we determine we need further evidence to support some of the GAT adjustments, or

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the outcomes from the GAT identify potential risk areas.

5. Objective evidence

Each adjustment should be linked to the statutory financials or, where possible, a supporting piece of objective evidence and an understanding of how the adjustment was determined.

Examples of objective evidence

The key sources of information can be classified as primary and secondary. We consider primary sources of information as fundamental to our understanding of the differences between the financials and the BAS. The secondary sources of information will be required to provide greater clarity on or evidence of adjustments where the primary sources are not sufficient.

Primary sources

Primary sources include:

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statutory financial statements

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notes to financial statements

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general ledger listing or trial balance directly mapped to financials

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accounting consolidation workpapers.

Secondary sources

Secondary sources include:

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internal reports generated by tax type or tax code

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internal reports on intragroup transactions based on entity code

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accounts receivable and payable detailed data or summaries

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management accounting reports for specific subsets of the business

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grouping reconciliation working papers including entity level breakdown

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fixed asset register.

Derived figures and proxies

We understand there will be some adjustments that are difficult to support with objective evidence. In these circumstances, as part of a review, we will seek to understand how the figure is derived and expect to see the calculations behind it. We will consider the use of proxies or assumptions (for example, using an average foreign currency translation rate instead of daily) where they are appropriate and relevant.

Where this is not possible, we will work with you to agree an appropriate approach.

Where a GAT is conducted outside of a review period (for example, for a SAGR), we recommend you continue with proxies and assumptions used previously in a GST review with the ATO, or for first time GAT preparers, use proxies and assumptions that best suit taxpayer's accounting systems.

6. Rating the GST analytical tool in a GST assurance review

Individual adjustment rating

While assessing transactions for Top 100 taxpayers, individual adjustments made in each step of the method statement will be rated separately. The ratings provided for each transaction will be based on the following criteria.^[5]

Overall GST analytical tool rating

Where we use the GAT in a GST assurance review, an overall rating will be given based on the extent of our understanding as to why accounting and GST results vary and the level of objective evidence provided. We rate the outcomes using the indicators set out in Table 4 of this Guide.

We will discuss our conclusions with you before we issue our TAR.

The GAT contributes to our level of overall assurance that you have paid the right amount of GST. For information about our structured approach to obtain assurance, see Large business justified trust.

7. Additional guidance

The following links provide additional guidance on how to calculate the GAT and answer some of the most frequently asked questions raised by taxpayers:

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GST Analytical Tool – Frequently asked questions

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GST Analytical Tool – Top 100 example

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GST Analytical Tool – Top 1000 example.

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