GST-free and input-taxed sales: the practical difference

Three different situations

A taxable sale normally carries 10% GST. A GST-free sale has no GST charged, while credits on related business purchases may still be available. An input-taxed sale also has no GST charged, but credits for related purchases are generally unavailable, subject to specific exceptions.

Many basic foods and some qualifying health or education services are GST-free. Residential rent is a common input-taxed example. The detail matters: a category name by itself does not establish the treatment of a specific product or service.

A mixed invoice example

Imagine a document containing a taxable service priced at $100 before GST and a separate $40 GST-free item. The service adds $10 GST. The final document is $150: $140 before GST and $10 tax.

Dividing $150 by 11 would give $13.64, which incorrectly assumes the whole sale is taxable. Applying 10% to the $140 subtotal would also be wrong. Calculate GST on the taxable amount only.

Using the invoice maker

Enter each distinct item on its own line. For a registered business, the tax selector offers GST 10%, GST-free and input-taxed. Select the treatment supported by the transaction, then review the preview. It prints each line’s treatment so the customer can distinguish them.

If the business is not registered for GST, switch off the registration option. The tool charges no GST and uses the heading “Invoice”. This is different from declaring that each sale itself qualifies as GST-free.

What to check when uncertain

Read the ATO guidance for the particular supply. Food, property, exports and health services can involve detailed conditions. Retain the basis for your decision with your business records. If the classification is unclear, ask a registered tax or BAS agent before issuing the final document.

Our bulk calculator assumes each entered amount is entirely taxable at 10%. It is intended for straightforward arithmetic, not classifying a mixed shopping receipt or preparing a BAS from a bank statement.

Common questions