GST core
Attribution of GST
Attribution of GST is the rule that decides which BAS period a sale's GST or a purchase's credit belongs to, depending on whether you account on a cash or accrual basis.
Attribution is how the GST system decides in which tax period to report GST on sales and credits on purchases. It matters because the BAS is lodged for specific periods, and each transaction must be placed in the right one. The rules depend on the accounting method you use for GST, either cash or accrual, and on the nature of the transaction.
Under the accrual method, GST on a sale is generally attributed to the period in which you receive any payment for it or issue an invoice for it, whichever happens first. Credits on purchases are generally attributed to the period in which you provide any of the payment or receive an invoice, whichever is earlier. This means you may need to report GST on a sale even though the customer has not yet paid you.
Under the cash method, GST on a sale is attributed to the period in which you receive the payment, and the credit on a purchase is attributed to the period in which you make the payment. This is usually easier for small businesses, because you do not report GST on invoices until the customer pays and you do not claim credits until you pay your supplier. Not every business can use the cash method, so check the eligibility conditions with the ATO.
Special attribution rules apply to certain situations, such as progressive supplies, payments by instalments, deposits and some lease arrangements. For these, GST may be spread across periods or tied to specific events like progress payments. The rules are detailed, so businesses with ongoing contracts should review their treatment.
Common misunderstandings include thinking that GST is reported when the invoice is created regardless of method, or mixing up the method for GST with the method used for income tax. They can be different. A business might report income on an accruals basis for income tax and use cash for GST, or vice versa, as long as it meets the conditions for each. Another mistake is switching methods without understanding the transition rules.
Make sure your accounting software is set to the same method you have chosen with the ATO, and that it produces BAS reports on that basis. Review the setting if your business grows or changes. This page is general information only, so confirm your method and its consequences with the ATO or a registered tax professional.
Worked example
A registered consultant issues an invoice for $5,500 including GST on 20 June, and the customer pays on 10 July. On an accrual basis, GST of $5,500 / 11 = $500 is attributed to the June quarter, when the invoice was issued. On a cash basis, the $500 is attributed to the September quarter, when the payment was received.
Practical tips
- Confirm whether your business accounts for GST on a cash or accrual basis, and set your software to match.
- If you have ongoing contracts or progress payments, check the special attribution rules rather than assuming the general rule applies.
- If you change your accounting method, get advice first, because transition rules can affect the amounts reported in the first period.