What “GST treatment” means on your activity statement (and the three codes people mix up)

A treatment is a code, not a rate

The GST rate tells you how much tax sits inside a taxable price: in Australia, one-eleventh of the total. It cannot tell you that an export goes to G2, that interest goes to G4, that a laptop goes to G10 rather than G11, or that a transfer between your own accounts goes nowhere at all. The treatment does that. It answers two questions for every line at once — is there GST in this price, and which label does the amount land on.

Accounting platforms have always had this column; they call it a tax rate or a tax code, with names like GST on Income, GST Free Income, Input Taxed, GST on Expenses, GST on Capital, GST Free Expenses and BAS Excluded. The ATO’s own calculation worksheet has seven buckets behind those names: G2, G3 and G4 on the sales side, G10 and G11 on purchases, with G13, G14 and G15 carving out what you cannot claim.

Fin keeps the treatment as a default on each category and an override on any single transaction, and it never infers a treatment from whether a GST figure happens to be recorded. A zero in the GST column can mean GST-free, input-taxed, out of scope, or simply not yet enriched — and those land on different labels.

GST-free: no GST on the sale, credits kept

A GST-free sale is a real supply with no GST charged on it, and you keep the right to claim credits on what you bought to make it. Basic food, most health and education, and exports are the standard examples. On the BAS a GST-free sale is counted in G1 (total sales) and again at G3 (other GST-free sales) so that the G9 calculation takes it back out; exports are the special case at G2.

On the purchase side the mirror is a purchase with no GST in the price — G11 for the amount, G14 to say there was nothing to claim. That is where a bank fee lives. Bank fees are a financial supply, so the bank does not charge GST on them; you report the $12 at G11 and G14, and no credit arises, however the line is labelled. The amount still has to be reported, which is what separates GST-free from BAS Excluded.

Input-taxed: no GST on the sale, credits denied

Input-taxed supplies also carry no GST, but with the opposite consequence for credits: the purchases that relate to making them are not creditable. The two everyday examples are financial supplies — the interest you earn on a business account — and residential rent. On the BAS an input-taxed sale goes to G1 and G4, and the related purchases go to G13 rather than earning a credit at 1B.

This is the code that gets mixed up most, and it is easy to see why: the GST outcome on the sale itself is identical to GST-free — zero. But G3 and G4 are different labels, and only G4 triggers G13 and counts toward the financial-acquisitions threshold that decides whether a business can still claim credits on its financial-supply costs. A product that labels interest income “GST Free” produces a statement with the right GST total and the wrong return. Interest is input-taxed; it belongs at G4.

Fin sets Input Taxed Income as the default treatment on Interest categories and Input Taxed Expenses on the costs that relate to them, so a landlord or anyone with interest on a business account lands on the right labels without thinking about it. The statement shows the treatment breakdown beside the labels, so you can see how much of G1 is G4.

BAS Excluded: not a supply at all

BAS Excluded — also called out of scope, or N-T for not reportable — marks money that sits outside the GST system and appears on no label. Transfers between your own accounts, loan principal, owner drawings, the GST payment you make to the ATO, and income-tax payments are all excluded. They are not sales or purchases; nothing about them belongs in G1 or G11.

The distinction from GST-free matters in both directions. Marking a genuine GST-free sale as excluded understates G1 and makes your turnover look smaller than it is. Marking a loan repayment as a GST-free purchase overstates G11. Wages are a special case: they are outside the GST section, but if you withhold PAYG they still appear on the same activity statement at W1 and W2.

The capital split: G10 and the second clock

A purchase that is a business asset — a laptop, a vehicle, fit-out — is a capital purchase, and the ATO keeps it on its own label. The $2,200 laptop goes to G10 rather than G11, and its $200 of GST goes to 1B in the quarter you bought it. That is the first tax event, and it closes this period.

The second tax event runs on a different clock. For income tax the $2,000 cost is not deductible at once; it is written off over the asset’s effective life — two years for a laptop under the 2025 determination, the four-year figure you see quoted online being the desktop row — or under the instant asset write-off if the asset qualifies for the year. Fin keeps the register entry linked to the same bank transaction, so one bank line carries the GST credit on the activity statement and the depreciation schedule in the asset register.

Three lines, three labels: the worked example

Take one quarter on one business account. A $12 monthly account fee: no GST in the price, so GST-Free Expenses — G11 and G14, nothing to 1B. $38 of interest received: a financial supply, so Input Taxed Income — G1 and G4, nothing to 1A, and the account fee that relates to it is strictly G13 rather than G14. A $2,200 laptop: GST on Capital — G10, $200 to 1B, and $2,000 onto the asset register.

Add a $5,000 transfer to your personal account and a $1,100 invoice to a domestic client. The transfer is BAS Excluded and touches no label. The invoice is GST on Income — G1, with $100 to 1A. Five lines from one feed, five different places on the statement, and the only thing that told them apart was the treatment.

What the statement shows you

Every label on the activity statement in Fin carries a badge saying where the figure came from: Auto-filled from treatments you set, Inferred where no treatment was set and Fin fell back to what it could see, Manual for figures you typed, and Adjusted for anything you changed — with the reason stored beside it. The Inferred rows are the ones to look at before you lodge.

Fin prepares; you lodge. The statement prints as a document, the audit trail lists the transactions behind each section, and from there you lodge through the ATO, myGov or your registered agent. AI2Fin is not a registered tax or BAS agent and does not submit anything on your behalf. This is general information, not personal tax advice — check what applies to you with your accountant or the relevant tax authority.