GST on expenses¶

Understanding how GST works on your business expenses.

How it works¶

In FairBooks, expense amounts are entered GST-inclusive. The GST component is then shown separately.

For a standard GST expense:

• Amount: $110.00 (total paid)
• GST Component: $10.00 (the GST portion)

GST fills in automatically¶

You do not have to work the GST out yourself. When you enter the amount, FairBooks calculates the GST as one eleventh of it. The figure also follows the account you choose: each account in your chart of accounts has a tax treatment, and any account that carries no GST sets the GST to $0 for you. That covers GST-free accounts such as bank fees and some insurance, along with input-taxed and BAS-excluded accounts.

The auto-filled figure is only a default. If a particular expense needs a different GST amount, type over it.

GST is rounded to the nearest cent, with half a cent always rounded up, which is the method the ATO specifies.

Impact on BAS¶

GST claimed on expenses reduces your GST liability in your BAS report. FairBooks uses cash basis accounting, so an expense is counted in the period its Date falls in. For an expense created by paying a bill, that is the date of the payment.

Bills and expenses¶

An unpaid bill is not part of your GST or income figures yet. When you mark a bill as paid, FairBooks creates a matching expense dated to the payment. That expense is what appears in your BAS and Profit and Loss, so the GST is counted when you actually paid, in line with cash basis.

See BAS reports for more details.