BAS and reporting
G10 capital purchases
G10 on the BAS is where you report the GST-inclusive cost of capital purchases, such as equipment, vehicles and other assets bought for use in your business over time.
G10 is the label on the BAS where you report your capital purchases for the period, including GST. Capital purchases are items that will provide a lasting benefit to the business, as opposed to everyday running costs. Typical examples include machinery, tools of higher value, computers, furniture, vehicles and fit-outs. The figure helps the ATO distinguish between asset purchases and ordinary expenses.
The line between capital and non-capital can be a matter of judgement. Generally, if an item has a useful life of more than a short period and is bought to be used in the business rather than resold or consumed, it is a capital purchase. Accounting practice and the income tax rules both matter here. Your accountant can help set a sensible policy for your business, such as a dollar threshold for treating items as assets.
Reporting a purchase at G10 does not mean you get a deduction or credit automatically. The GST credit is separate and still depends on having a valid tax invoice and the item being acquired for a creditable purpose. The credit for a capital purchase is included in label 1B. Income tax treatment is different, and may be through depreciation, a write-off under the small business rules, or a pool. Thresholds change, so check the ATO for current limits.
Some capital purchases have special rules. Cars have a limit for the purposes of luxury car tax and for the income tax depreciation cap, and the GST credit is limited as well. Items used partly for private purposes need to be apportioned, and the credit claimed only for the business portion. Purchases of residential premises or items used for input-taxed supplies generally do not give a full credit.
Software usually fills G10 based on the tax codes, such as GST on capital. Check that new equipment is coded to capital rather than expenses, and that any amounts without GST, such as GST-free capital items, are coded appropriately. Mistakes can lead to the wrong credit amount or an incorrect deduction. Keep invoices and the asset register for five years or longer.
If you later sell or stop using the asset, there may be GST consequences. The sale of a business asset is generally a taxable supply, and GST on the sale is reported at 1A. This is general information only, so confirm your situation with the ATO or a registered tax professional.
Worked example
In October, Ahmed buys a commercial oven for $13,200 including GST and a delivery van for $44,000 including GST, both with tax invoices. He reports $13,200 plus $44,000, or $57,200, at G10. The credits are $1,200 on the oven and $4,000 on the van (each total divided by 11), which are included at label 1B, subject to the car rules and business use.
Practical tips
- Agree a dollar threshold with your accountant for when a purchase is treated as an asset and keep to it.
- Remember that the GST credit and the income tax deduction are separate, and each has its own rules.
- For vehicles and mixed-use items, claim only the business portion and check the car rules.