1B — GST on purchases¶

When you buy things for your business, the price often already includes GST. If you are registered for GST, you can usually claim that GST back. Label 1B on your BAS is where you add up all of that GST and tell the Australian Taxation Office (ATO) how much you are claiming.

Think of 1B as the mirror image of 1A. At 1A you report the GST you collected on your sales. At 1B you report the GST you paid on your purchases and want back.

Why this matters¶

The GST you paid on business purchases is money you can usually get back. If you leave 1B too low, you claim less than you are entitled to and pay more than you need to. Getting 1B right is what makes sure you only ever pay the ATO the net amount of GST — not GST twice over.

What you will learn¶

• What label 1B on the BAS is
• What GST amount you claim at 1B
• How 1A and 1B combine into a net GST figure

Understanding the concept¶

GST is a 10% tax added to the price of most goods and services. When your business buys something for the business, the price you pay usually already has GST built into it.

The ATO explains that to claim your GST credits you report the GST included in the price of your purchases at 1B GST on purchases. Importantly, you report the GST amount, not the total price of your purchases. So if a purchase cost you $110 including GST, the amount that belongs at 1B is the $10 of GST — not the $110.

You add up the GST from all your eligible business purchases for the period and put the total at 1B. These GST credits are sometimes called input tax credits.

1B works together with 1A (the GST you collected on sales):

• 1A is the GST you collected — money you owe the ATO.
• 1B is the GST you paid on purchases — money the ATO gives back.

Broadly, 1A minus 1B is your net GST position for the period. If 1A is larger, you pay the difference to the ATO. If 1B is larger, the ATO refunds the difference to you.

Example¶

Priya runs a small café. During the quarter she buys a new coffee machine, ingredients, and packaging for the business. Each of those purchases had GST included in the price.

When Priya adds up the GST from all her eligible business purchases, it comes to $900. She puts $900 at label 1B.

For the same quarter, Priya collected $2,000 of GST on her sales, which she reported at 1A. Her net GST for the quarter is broadly 1A minus 1B: $2,000 − $900 = $1,100. That $1,100 is the amount of GST she pays to the ATO for the period.

Common mistakes¶

• Putting the full purchase price at 1B instead of just the GST portion.
• Claiming GST on purchases that had no GST in them (GST-free items like most basic food, for example).
• Forgetting that 1B is only for business purchases — private spending does not belong here.
• Claiming the whole GST on something used partly for private purposes rather than just the business share.

How this works in myaccountant¶

Key points¶

• 1B is the total GST credits you are claiming on your business purchases.
• You report the GST amount only, not the full purchase price.
• 1B is the GST the ATO effectively gives back to you.
• 1A is GST collected on sales; 1B is GST paid on purchases.
• Broadly, 1A minus 1B is your net GST for the period.
• Only business purchases with GST in them belong at 1B.

Learn next¶

• 1A — GST on sales
• G11 — Non-capital purchases
• G10 — Capital purchases

General information only — not tax, super or financial advice.