How GST works in Xero

Xero uses one GST account, and only includes transactions from this account in the Business Activity Statement (BAS). Xero uses your selected tax treatment and tax rate to determine when to include your transactions in the BAS.

How does Xero calculate GST for BAS?

Xero includes GST in your BAS based on the GST Accounting Method selected for your activity statement. If you choose:

  • Cash Basis - inclusion is based on the transaction's payment date.
  • Accruals Basis - inclusion is based on the transaction date. GST on expense claims is included on the accruals basis based on the claim's reporting date.

For spend money and receive money transactions, the transaction date is used for both cash basis and accruals basis.

Manual journals are included based on the journal date. They will only be included on a cash basis if the Show journal on cash basis reports checkbox is selected.

Tax treatment and tax rate on transactions

You can choose whether a transaction has GST, how Xero will calculate it, and the tax rate Xero applies to each line item.

Tax Options

  • Xero uses the tax rate on each line item to calculate the tax on that line. The total tax for the transaction is the sum of the tax on each line.
  • If you select Tax Inclusive, the transaction will include the tax for each line item in the subtotal.
  • If you select Tax Exclusive, the tax is excluded from each line item and added on after the subtotal.
  • If you select Tax Inclusive or Tax Exclusive for a transaction, the tax rate for each line item will default to the tax rate set for the account. If required, you can choose a different tax rate for each line item.
  • If you select No Tax for a transaction, Xero applies the BAS Excluded tax rate to the whole transaction. Xero will exclude the transaction from your BAS, but still include it in the GST Audit Report.
  • If your transaction is reportable on your BAS but doesn't incur GST (GST is 0%), select Tax Inclusive or Tax Exclusive and choose a tax rate with 0% GST other than BAS Excluded.

See how Xero populates the Simpler BAS activity statement for information about the individual label totals in the BAS. If you use Full BAS, see the GST Calculation Worksheet instead.

Additional GST accounts aren't included in GST reports

On the default chart of accounts in Xero the GST account is the system account 820 - GST. If you create another GST account in the chart of accounts, Xero won't include it in the BAS.

Use custom tax rates instead of creating another GST account

Xero provides default tax rates. If you create a custom tax rate, Xero will record tax amounts from transactions using your new rate in the GST account and include the transactions in the BAS.

Full BAS doesn't support custom tax rates other than 0% and 10%. If you create a custom tax rate with another percentage, the GST Audit Report will be correct but your Full BAS in Xero will be incorrect. Use the GST Audit Report to manually complete the BAS.