Capital purchase (GST on Capital)
An asset you buy to use over years — G10 on the BAS, then depreciated.
A capital purchase is a business asset you buy to use over more than one year — a laptop, a vehicle, equipment, fit-out — rather than something consumed in the period. On the BAS it is reported at G10 (capital purchases) instead of G11, with any GST to 1B in the quarter of purchase; for income tax, the cost is written off over the asset’s effective life or under the write-off rules.
The ATO keeps capital and non-capital purchases on separate labels so the GST return shows how much of a business’s spending is investment. The GST credit does not wait for the depreciation: the whole credit is claimed in the quarter you bought the asset, while the deduction for the cost is spread over years through the asset register.
Worked example
You buy a $2,200 laptop. The $2,200 goes to G10 and the $200 of GST to 1B on this quarter’s BAS. The $2,000 GST-exclusive cost then goes on the asset register with a two-year effective life and is deducted across those two years, reduced by any private-use share.
Common mistake
Recording the laptop as an ordinary expense. That sends it to G11 instead of G10 on the BAS, and claims the whole cost as a deduction in year one when it may belong over the effective life.
Grounded in ATO guidance. Figures last checked . General information, not tax advice.
Related terms
Tax treatment (GST treatment)
The code that decides which activity-statement label a transaction feeds.
Depreciation (decline in value)
Claiming the cost of a big asset gradually over its life.
Effective life
How many years an asset is expected to be used — the base of every depreciation rate.
Instant asset write-off
Immediately deduct an eligible asset instead of depreciating it.
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Questions about this term
Capital purchase (GST on Capital): common questions
- Do I wait for depreciation before claiming the GST on an asset?
- No — the whole GST credit is claimed in the quarter you bought the asset. A $2,200 laptop sends $200 to 1B on this quarter’s BAS, while the $2,000 GST-exclusive cost goes on the asset register and is deducted across its effective life. The credit and the deduction run on different clocks.
- What is the difference between G10 and G11 on the BAS?
- G10 is capital purchases — assets you buy to use over more than one year. G11 is other purchases, consumed in the period. The ATO keeps them on separate labels so the return shows how much of a business’s spending is investment. Recording a laptop as an ordinary expense sends it to the wrong label.
- What makes a purchase “capital” rather than an ordinary expense?
- Whether you will use it over more than one year. A laptop, a vehicle, equipment or fit-out is capital; something consumed in the period is not. The line matters twice — for which BAS label it lands on, and for whether the cost is deducted at once or spread over its effective life.
- Where does a capital purchase go after the BAS is lodged?
- Onto the asset register. The GST-exclusive cost — $2,000 on a $2,200 laptop — is entered with its effective life and any private-use share, and 2Fin’s asset register and depreciation schedule spreads the deduction over those years. The BAS credit was the first half; the register is the second.
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