Input taxed
Sales with no GST that also deny credits on related purchases.
Input-taxed sales are supplies you make without charging GST on which you also cannot claim GST credits for the purchases that relate to them. The common examples are interest and other financial supplies, and residential rent. On the Australian BAS they are reported at G1 and G4, and related purchases go to G13.
This is the treatment people most often confuse with GST-free. Both carry zero GST on the sale, but GST-free sales keep your right to credits and input-taxed sales take it away. A landlord with a residential property or a business earning bank interest has input-taxed income, and a product that labels that income “GST Free” is reporting it on the wrong label.
Worked example
You receive $400 of interest on your business savings account in a quarter. It is reported at G1 (total sales) and again at G4 (input-taxed sales), so no GST is counted on it. The $10 account-keeping fee on that same account relates to making an input-taxed supply, so it goes to G13 rather than earning a credit.
Common mistake
Labelling interest income GST-free. The GST outcome on the sale is the same — zero — but G3 and G4 are different labels, and only G4 triggers the G13 denial and counts toward the financial-acquisitions threshold.
Grounded in ATO guidance. Figures last checked . General information, not tax advice.
Related terms
GST-free
Sales with no GST where you still claim credits on your purchases.
Tax treatment (GST treatment)
The code that decides which activity-statement label a transaction feeds.
BAS Excluded (out of scope)
Money that is not a supply and does not appear on the activity statement.
GST (Goods and Services Tax)
Australia’s flat 10% tax on most goods and services.
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Questions about this term
Input taxed: common questions
- Which of my income is input-taxed?
- Interest and other financial supplies, and residential rent, are the common examples. A business earning bank interest or a landlord with a residential property has input-taxed income. It is reported at G1 and G4 on the BAS, with no GST counted on it.
- Can I claim GST credits on costs related to input-taxed income?
- No — that is the defining feature. GST-free sales keep your right to credits; input-taxed sales take it away for the purchases that relate to them. The $10 account-keeping fee on the savings account that earned $400 of interest goes to G13 rather than earning a credit.
- What goes wrong if I label interest income as GST-free?
- The GST on the sale is zero either way, but G3 and G4 are different labels. Only G4 triggers the G13 denial of credits on related purchases and counts toward the financial-acquisitions threshold, so labelling interest GST-free reports it on the wrong label and hides the credits you are not entitled to.
- How do I report bank interest on my BAS?
- At G1 and again at G4. Receive $400 of interest on your business savings account in a quarter and it appears in total sales at G1 and in input-taxed sales at G4, so no GST is counted on it. In 2Fin, the Input Taxed Income treatment is what sends it to those labels.
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