GST core
Private or domestic acquisition
A private or domestic acquisition is a purchase made for personal or household use, which is not for a creditable purpose, so no GST credit can be claimed for it.
A private or domestic acquisition is something you buy for personal or household purposes rather than for your business. Examples include groceries for your family, a personal holiday, home furnishings, and personal clothing. Because the purchase is not for a creditable purpose, you cannot claim a GST credit on it, even if you are registered for GST and paid with business funds.
The rule is important for sole traders and small business owners where personal and business expenses are easily mixed. If you pay for something personal from your business bank account, the GST is not claimable, and the purchase may also need to be treated as a drawing or other personal amount in your accounts. Mixing the two can lead to errors in your BAS.
Some purchases are partly private and partly for business. A mobile phone or a vehicle used for both purposes is not wholly private, so the rule on partial creditable purpose applies and you claim credits only for the business share. If you buy something that is entirely private, none of the GST is claimable, and it should be left out of your BAS purchase labels.
The ATO pays attention to private expenses claimed in business returns. Claiming credits on personal items is a common compliance issue and can lead to interest and penalties if found on review. Keeping personal and business spending separate, ideally with separate bank accounts and cards, makes it easier to demonstrate that your claims are correct.
Common misunderstandings include thinking that a purchase becomes business-related because it was paid from a business account, because you are registered for GST or because you held a tax invoice. The purpose of the purchase is what matters. Another mistake is assuming that anything you could in theory use for your business, such as a home computer used mainly by the family, qualifies fully.
Record what you buy and why, and keep invoices that make the nature of the purchase clear. If you realise you have claimed a credit for a private purchase, correct it in a later BAS or by following the ATO's amendment guidance. This is general information only, so confirm your situation with the ATO or a registered tax professional.
Worked example
A sole trader registered for GST pays $330 including GST for a family dinner using the business card. GST included is $330 / 11 = $30. Because the dinner is a private or domestic acquisition, the sole trader cannot claim the $30 credit and should treat the $330 as a personal drawing, not a business expense.
Practical tips
- Use a separate bank account and card for the business so that private purchases do not end up in your BAS.
- If a purchase is partly private, apportion it and claim only the business share rather than the whole amount.
- If you accidentally claimed a private purchase, correct it promptly rather than waiting for the ATO to raise it.