Definition
GST is the goods and services tax, a broad tax on most goods and services sold in Australia. Businesses with turnover at or above the registration threshold must register, charge GST on sales and lodge business activity statements. For finance, GST matters in three ways: lodged BAS evidence turnover, overdue GST debts worry lenders, and GST on asset purchases affects how much you borrow and claim back.
GST is administered by the ATO, and the official GST guidance covers registration, rates and reporting.
GST as evidence
When you lodge BAS on time, you create a record of reported sales that lenders can check against your bank statements. Low doc lenders in particular may accept BAS in place of full financial statements.
GST as a risk signal
Unpaid GST becomes an ATO debt. Large or growing tax debts, especially ones not on a payment plan, can lead to declines or tougher terms. Directors should also understand how unpaid GST links to director penalty notices.
GST on assets
How finance is structured affects whether and when GST on an asset can be claimed. Under a chattel mortgage the business owns the asset from the start, while under a lease GST is generally built into each rental. Ask your accountant before choosing.
Plan for the quarter
Set aside GST as you collect it so BAS time does not create a cash gap. Our guide to BAS and GST cash planning has a simple method. If a gap still appears, make one enquiry.
Common questions
Do lenders look at my BAS?
Many do, especially for low doc and cash-flow loans, because lodged BAS show reported sales over time.
Can I borrow to pay a GST debt?
Some lenders offer finance to clear ATO debts. Compare it with an ATO payment plan before deciding.
Can I claim GST on a financed vehicle?
Under a chattel mortgage, a GST-registered business may be able to claim the GST on the purchase price in its BAS. Confirm the treatment with your accountant.
Sources and further reading