Whats the difference between Input taxed sales and GST free sales?

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Input taxed sales & GST free sales, what’s the difference?

Input taxed sales and GST free sales are both considered income and both do not attract GST. The Australian taxation office has a set of clear rules defining the two types of transactions which can be summarized as follows:

Input taxed sales are sales in which attract no GST and also are not allowed to be offset with GST on purchases involved in producing the good or service sold.

GST free sales are sales which attract no GST themselves but can be offset with the GST on purchases involved in producing the good or service.

Input taxed sales examples

Examples of input taxed sales in which attract no GST and can not be offset with GST paid on input factors include:

1) Residential rental income – There is no GST on residential rent and you cannot claim the GST you paid for things such as general maintenance, painting, plumbing ect.

2) Financial supplies – If you lend money, grant a customer credit or sell shares this will be considered a financial supply. If for example you charge interest on money you lent out you will not be able to include GST on the interest or claim GST paid on inputs directly related to charging the interest.

GST free sales examples

GST free sales which do not include GST but for which you can claim GST credits for the purchases you made to create the sale include:

1) Most basic foods such as bread, milk, meat and fruit.

2) Medical, health and care services including any medical expenses which involve Medicare benefits such as doctors’ visits and procedures.

3) Exports of goods or service to any country outside Australia.

4) Childcare expenses.

You can find more details on the specifics and exceptions to the above examples of input tax sales and GST free sales Here

Need help with GST related matters?

For help with any GST related activities contact CTK Accounting at ctkaccounting.com.au

CTK Accounting can help with any bookkeeping, payroll or BAS related matters and has bookkeepers servicing Wollongong, Sydney & The Southern Highlands.

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