Australian GST Accounting Method Checker
Australian GST Accounting Method Checker
Use this guide to understand the two common GST accounting methods in Australia: cash and non-cash (accruals). The method you use affects when GST lands on your BAS.
Cash method
Under the cash method, you account for GST when money actually changes hands: when customers pay you and when you pay your suppliers. You can generally use the cash method if your GST turnover is $10 million or less, subject to the detailed ATO rules.
Non-cash method
Under the non-cash (accruals) method, GST is attributed when you issue an invoice or receive payment, whichever comes first. This is the default method for businesses that are not eligible for, or do not choose, cash accounting.
This checker is a guide, not a decision
Whether you can use the cash method depends on ATO eligibility rules. This checker is educational only and is not tax advice. Check your eligibility before lodging on a particular basis.
Worked example: one invoice, two different quarters
A Brisbane electrician invoices a client $11,000 including GST on 28 June, but the client does not pay until 15 July. On the cash method, the $1,000 of GST falls into the July to September quarter, because that is when the money arrived. On the accruals method, the same $1,000 falls into the April to June quarter, because that is when the invoice went out. The accounting method does not change the total GST. It changes which BAS the $1,000 appears on, which matters for cash flow. You can model either timing on the BAS GST calculator.
Practical tips for choosing and changing methods
Check your eligibility for the cash method before you assume you can use it. Apply your chosen method consistently across the whole BAS period, because mixing methods within a period causes errors. If you change methods, adjustments may be needed so amounts are not counted twice or missed entirely. Tell your bookkeeper or tax agent which method you use so your software is set up the right way. The BAS GST estimator can show how each method affects an upcoming quarter.
Frequently asked questions
Can any business use the cash method?
Generally, yes, if your GST turnover is $10 million or less and you meet the other ATO conditions. Larger businesses use the accruals method.
What happens if I change accounting methods?
You may need to make adjustments on your BAS so that sales and purchases are counted once and only once. Get advice before switching mid-stream.
Does my GST method affect my income tax?
They are separate choices. Your GST accounting method does not dictate how you account for income tax, though many small businesses use the same basis for both.
Which method is better for cash flow?
The cash method usually suits businesses with slow-paying customers, because you do not pay GST to the ATO before the customer has paid you.
