Can You Claim GST Back on Equipment Purchases Through Your BAS?

Can You Claim GST Back on Equipment Purchases Through Your BAS?

Yes. When a GST-registered business purchases equipment, the GST component of that purchase can be claimed back as an input tax credit through the next Business Activity Statement (BAS). Timing the purchase to settle before the end of a BAS quarter means the credit is recovered sooner, which can provide a meaningful cash flow boost when it’s needed most.

How GST Credits on Equipment Purchases Work

When a business that is registered for GST buys a piece of equipment, it pays GST on top of the purchase price. That GST isn’t a permanent cost — it can be claimed back as an input tax credit on the next BAS lodgement, as long as the asset is used for business purposes.

The timing of when the purchase settles determines which BAS quarter the credit falls into. Settling before the end of a quarter means the refund comes back in the next lodgement cycle. Settling after that date pushes the credit back an entire quarter, delaying the cash return by up to three months.

Why Timing Your Equipment Purchase to the BAS Quarter Matters

Recovering GST sooner rather than later has a direct e!ect on working capital. The credit reduces the net cash outlay of the purchase immediately, rather than sitting as a future receivable for months. This is particularly useful for businesses that are managing cash flow around seasonal peaks, quieter periods, or periods of higher operating costs.

Three reasons to time a purchase to the current BAS quarter:

• Immediate GST credit: Claiming in the current BAS quarter allows the business to recover funds in the next lodgement cycle rather than waiting an additional three months
• Cash flow support: An early refund can help cover wages, fuel, maintenance, and other operating costs at a time when they’re most needed
• Faster payback on the asset: Recovering GST sooner reduces the e!ective upfront cost of the equipment and o!sets initial outlays earlier in the asset’s life

Worked Example: Truck Purchase Before the End of a BAS Quarter

A transport business purchases a new truck for $250,000 plus GST ($25,000). By settling before the end of the current BAS quarter, the business can claim back the full $25,000 GST in the next BAS lodgement.

That $25,000 goes back into the business quickly, freeing up working capital for fuel, wages, and other expenses, rather than sitting as an unclaimed credit for another three months.

Acting early also means the truck is on the road sooner, generating revenue during the period the business needs it most, rather than arriving after the opportunity has passed.

Frequently Asked Questions

What is an input tax credit on equipment? An input tax credit is the GST a business paid on a purchase that it can claim back through its BAS. For equipment purchases, the input tax credit equals the GST component of the purchase price, which is currently 10% of the pre-GST price in Australia.

When do I receive the GST credit after lodging my BAS? The timing depends on how and when the BAS is lodged and processed. Businesses that lodge electronically and are owed a refund generally receive it within two weeks of lodgement, though this can vary.

Does it matter whether I pay cash or finance the equipment when claiming GST? The method of payment generally doesn’t a!ect the ability to claim the GST input tax credit, provided the purchase is tax-invoiced and the asset is used for business purposes. However, the timing of when the purchase is considered to have settled may vary depending on the finance structure, so it’s worth confirming with an accountant.

What if I miss the BAS quarter deadline? The GST credit isn’t lost, it simply shifts to the following quarter’s BAS. The practical impact is a three-month delay in receiving the cash back, which may or may not matter depending on the business’s cash flow position.

Do all businesses qualify to claim GST on equipment? Only businesses registered for GST can claim input tax credits. Businesses with an annual turnover below the GST registration threshold, currently $75,000 for most businesses, are not required to register and cannot claim GST credits unless they have chosen to register voluntarily.

Key Takeaway

Timing an equipment purchase to settle before the end of a BAS quarter can turn a future tax credit into an immediate cash flow benefit. The GST doesn’t disappear if the timing is missed, but recovering it sooner reduces the net cost of the purchase and strengthens the business’s working capital position at the time it’s most needed.

Talk to an Equipment Finance Specialist

If you’re considering an equipment purchase and want to understand how to time it for maximum GST benefit, speak with your accountant or an equipment finance specialist before the end of the current BAS quarter.