Is interest income GST-free or BAS Excluded?

Neither — it is input taxed. Interest you receive is a financial supply: a real supply carrying no GST, reported at G1 and again at G4. Calling it GST-free puts it on G3 instead, and only G4 denies the credits on related purchases at G13.

How do bank fees go on the BAS?

A bank fee has no GST in its price, so it is a purchase at G11 noted again at G14, with nothing to claim. It sits on a different label from the interest paid into the same account, which is why one statement can produce several treatments.

What is the quickest way to tell the three apart?

Ask whether it is a supply. A transfer, a drawing, loan principal, a tax payment or wages is not a supply, so it is BAS Excluded and touches no GST label. If it is a supply, ask whether it keeps your credits: GST-free keeps them, input taxed takes them away.

Does it matter if I pick the wrong one when no GST is payable either way?

Yes, because the labels differ even when the GST is nil. The choice decides which BAS label the amount lands on, whether the credits on related purchases survive, and whether the amount counts toward the financial-acquisitions threshold — none of which is visible from the fact that the GST was zero.

Commonly confused · AU

GST-Free vs BAS Excluded vs Input Taxed

Three ways a line can carry no GST — and three different BAS labels.

All three mean no GST is charged, and that is where the similarity ends. GST-free is a real supply taxed at nil, and you keep the right to claim GST credits on the purchases behind it. Input taxed is a real supply with no GST where you give up that right — interest you receive and residential rent are the everyday cases. BAS Excluded is not a supply at all: transfers between your own accounts, loan principal, owner drawings, the GST payment itself, income tax and wages. The zero looks identical on the paperwork; the BAS labels are different, and so is what you can claim.

The practical question is rarely "what does this term mean" — it is "which one applies to the line in front of me". Work it in that order: is it a supply at all? If no, it is BAS Excluded and moves no GST label. If yes, does it keep your credits or take them away? Keeping them is GST-free; taking them away is input taxed.

Worked example

Three lines on one bank statement. $38 of interest received is input taxed and reported at G1 and G4. A $12 bank fee has no GST in its price, so it is a purchase at G11 noted again at G14 with nothing to claim. A $5,000 transfer to your own personal account is BAS Excluded and moves no label at all. Same feed, three treatments, three outcomes.

Common mistake

Calling interest income GST-free because no GST was charged. The GST outcome is nil either way, but G3 and G4 are different labels, and only G4 denies the related credits at G13 and counts toward the financial-acquisitions threshold.

See it in AI2Fin: See the treatment set per line, with its BAS label →

Grounded in ATO — When to charge GST (and when not to) guidance. Figures last checked 28 September 2026. General information, not tax advice.

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