ATO and administration
GST Act
The GST Act is the common shorthand for A New Tax System (Goods and Services Tax) Act 1999, the federal law that governs how GST is charged, claimed and reported in Australia.
When accountants, the ATO and business owners speak about the GST Act, they mean the A New Tax System (Goods and Services Tax) Act 1999. The shorter name is convenient because the full title is long, and because it makes clear which of the many tax Acts is being discussed. If you see the phrase in an ATO ruling, a tax invoice question or a professional's email, it points to the law that creates GST.
There are some related terms worth keeping apart. The GST Act is the primary legislation passed by Parliament. The regulations are secondary rules made under it. ATO rulings and determinations are not law, but they explain how the Commissioner of Taxation reads the Act. And the BAS is simply the form you use to report amounts calculated under the Act. Each of these sits at a different level of authority.
In practical terms, the GST Act determines the basic building blocks of the tax. It defines a taxable supply, sets the GST rate at 10%, identifies which supplies are GST-free or input-taxed, explains who is required to register, and sets out when credits can be claimed. It also describes the documents needed to support a credit, which is why a tax invoice is required for business purchases above the stated threshold.
The Act is organised into divisions, each dealing with a topic such as the registration process, adjustments, special rules for groups and joint ventures, imports, financial supplies or second-hand goods. When ATO guidance refers to a division number, it is pointing to the part of the Act that contains the rule. You do not need to memorise those references, but they are helpful if you want to read the primary source.
A frequent misunderstanding is believing the GST Act covers all taxes on a transaction. It does not. Stamp duty, payroll tax and land tax are state and territory taxes administered by revenue offices, not the ATO, and they have their own laws. Income tax is dealt with by separate Acts. Customs duty, excise and luxury car tax also have their own legislation, even though they can interact with GST in the same transaction.
If you are ever unsure whether something is covered by the GST Act, start with the ATO's guidance for your type of business, which is written in plain language and links to the legal basis. For complex matters such as property sales, a private ruling can provide certainty about your own situation. This is general information only, so confirm how the law applies to you with the ATO or a registered tax professional.
Worked example
A landscaper sells a $2,000 job and wonders where the rule to charge GST comes from. The GST Act treats the job as a taxable supply by a registered business, so GST of 10% applies: $2,000 times 10% equals $200, for a total of $2,200. If he later buys $550 of materials including GST, the Act lets him claim a credit of $550 divided by 11, which is $50.
Practical tips
- Treat the GST Act as the source of the rules, and ATO guidance as the explanation. Do not rely on informal summaries for complex issues.
- Remember state taxes such as stamp duty and payroll tax come from different laws and different authorities.
- If your situation is unusual, consider asking the ATO for a private ruling rather than guessing.