GST codes are short labels — such as CAP, FRE, INP, or G11 — that bookkeepers assign to each transaction in an accounting system to define how that transaction is treated for Goods and Services Tax under Australia's GST legislation. The code determines whether 10% GST is included in the amount, whether an input tax credit (ITC) can be claimed, and which label on the Business Activity Statement (BAS) the figure flows into.
Getting the code right on every transaction is the difference between a clean BAS and one that triggers an ATO audit query or results in overclaimed credits. This guide covers every code Australian bookkeepers encounter regularly, explains the common mistakes, and explains how AI-assisted coding is reducing the manual effort required to get them right.
All ATO thresholds and GST rules referenced here are drawn from current ATO guidance. Confirm at ato.gov.au before applying to a specific client situation.
Why GST codes matter for BAS accuracy and ATO compliance
Every BAS lodged under Australia's GST system is effectively a summary of how thousands of individual transactions have been coded. When a transaction is coded incorrectly, the error propagates into the BAS — overstating or understating GST collected or GST credits claimed.
The ATO matches BAS data against third-party information (bank data, TPAR reports, supplier BAS figures) and can identify patterns that suggest miscoding. Common consequences of persistent miscoding include:
- Adjusted assessments requiring repayment of overclaimed ITC plus the general interest charge
- Penalties of up to 75% of the shortfall for recklessness, or 25% for failure to take reasonable care
- Audit selection — the ATO's data-matching systems flag accounts where GST credits appear inconsistent with industry benchmarks
For a bookkeeper managing a portfolio of clients, coding discipline is not just a compliance obligation — it is a professional liability matter.
The foundation of reliable GST coding is a reconciled bank account. A transaction that hasn't been matched to the bank statement may be missing entirely, duplicated, or have the wrong amount — all of which distort the GST position regardless of how accurately it is coded. See What is Bank Reconciliation? for the full reconciliation process.
The main GST codes Australian bookkeepers use
CAP — Capital acquisitions (input tax credit eligible)
CAP is assigned to capital purchases that include GST and for which the business is entitled to claim an input tax credit. Capital items are assets expected to be used over more than one income year — plant and equipment, vehicles, computers, machinery.
The practical distinction between CAP and G11 is accounting treatment rather than GST entitlement: both allow a full ITC claim, but CAP directs the cost to a capital (balance sheet) account, while G11 directs it to an expense account. The BAS impact is the same — the GST portion flows into G10.
When to use CAP: Purchase of a laptop for business use, acquisition of a forklift, CCTV installation.
Common error: Coding a laptop under $300 as CAP when the client has elected the immediate deduction threshold — the GST treatment is unchanged, but the account code should reflect the immediate expensing. Discuss with the client's tax agent when in doubt.
FRE — GST-free supplies
FRE is assigned to transactions that are explicitly GST-free under the GST Act — meaning no GST is charged and no ITC is claimable (because no GST was paid). The full consideration paid is the cost; there is no hidden GST component.
Common GST-free categories under Australian law:
- Basic food (unprocessed groceries, fresh produce)
- Most health services (GP, physiotherapy, dental — though some allied health is taxable)
- Educational courses supplied by a recognised provider
- Exports of goods or services (the recipient is outside Australia)
- Certain childcare and religious services
When to use FRE: Woolworths grocery spend (subject to the mixed-supply rule), a GP consultation charged to the business, an invoice from an overseas SaaS provider (GST-free export).
Important nuance for overseas suppliers: From 1 July 2017, overseas suppliers of digital services to Australian consumers above the registration threshold must charge GST. A foreign supplier registered for Australian GST should include GST on their invoice — this would be coded GST, not FRE. Review invoices from overseas suppliers carefully.
INP — Input-taxed supplies
INP covers transactions that are input-taxed: no GST is included in the price, and — critically — no ITC can be claimed, even if the supplier is GST-registered. This distinguishes INP from FRE: GST-free transactions don't carry GST, and you can claim ITCs on related costs; input-taxed transactions don't carry GST, and you cannot claim ITCs.
Common input-taxed categories:
- Bank fees and account-keeping charges
- Merchant facility fees (EFTPOS terminal, Stripe fees)
- Residential rent received or paid
- Financial supplies (interest, insurance premiums — though the GST treatment of insurance is nuanced; general insurance is taxable at 10%)
When to use INP: Monthly account-keeping fee from a major bank, merchant service fee from a payment processor, lease payment for a residential property.
The bank fee trap: This is the single most common coding error in Australian bookkeeping. Bank fees are INP — not FRE. There is no GST on bank fees, but the reason matters: they are input-taxed, not GST-free. Coding them as FRE produces the same BAS outcome in most cases but is technically incorrect and can cause errors in clients who make a mix of taxable and input-taxed supplies.
N-T — Not reportable (outside the GST system)
N-T (sometimes displayed as "N-T", "NT", or "Out of scope" depending on the accounting platform) covers transactions that fall entirely outside the GST system. No GST is collected or paid, and the transaction does not appear in any BAS label.
Common N-T transactions:
- ATO income tax payments and PAYG instalments
- Superannuation contributions (employer super is outside GST)
- ASIC fees and government statutory charges
- Salary and wage payments (handled through STP, not BAS)
- Loan repayments (principal components)
- Dividends and inter-entity equity movements
- Owner's drawings or capital contributions
When to use N-T: Monthly PAYG instalment paid to the ATO, super guarantee payment to a fund, payroll run (wages only — the PAYG withholding portion is also N-T).
N-T vs FRE — why the distinction matters: If a transaction is incorrectly coded FRE rather than N-T, it will appear in G15 (total purchases) on the BAS and reduce the proportion of business purchases that attract ITCs. While this often produces no direct GST liability, it distorts the BAS and can trigger a review.
G1 — Total taxable sales
G1 is the BAS label for standard taxable sales — sales where 10% GST has been collected and must be remitted to the ATO. The figure at G1 is the GST-inclusive amount; the GST component flows through to 1A (GST on sales).
In most cloud accounting platforms, G1 is the default coding for income transactions. Bookkeepers need to override it when the client makes GST-free or input-taxed sales.
When to use G1: Invoices issued by the client for standard goods or services — professional services, retail sales, tradespeople's labour and materials, software subscriptions supplied within Australia.
G10 — Capital acquisitions (taxable)
G10 captures the total amount of capital acquisitions for which GST has been paid and an ITC claimed. It pairs with CAP — the code directs the transaction to the G10 label on the BAS.
G10 is reported separately from G11 so the ATO can monitor the level of capital investment relative to the business's scale and industry.
G11 — Non-capital acquisitions (the most common category)
G11 is the catch-all for all non-capital business purchases that include GST. If a transaction is a taxable purchase and it is not a capital item, it lands in G11. The majority of day-to-day business expenses — stationery, subscriptions, professional services, advertising, repairs and maintenance — are coded here.
The ITC claimed on G11 purchases flows to 1B (GST on purchases) and reduces the net GST payable.
When to use G11: Xero subscription, office supplies from Officeworks (the taxable component), a plumber's invoice for a business premises repair, an advertising spend on a platform that charges Australian GST.
G14 — Purchases for making input-taxed sales
G14 captures purchases that relate to making input-taxed sales — for example, a property manager purchasing stationery used exclusively in managing residential tenancies. No ITC is claimable on these purchases because the associated sales are input-taxed.
G14 is most relevant for financial services firms, residential property managers, and businesses with a mixed supply profile. For most small business clients, G14 will be nil.
G15 — Estimated private use of purchases
G15 is a reduction item. Where a purchase has both business and private use — a mobile phone, a car, a home office — the private-use portion must be excluded from the ITC claim. G15 records the estimated private-use proportion of purchases so the credit is correctly apportioned.
The ATO's reasonable private-use benchmarks apply where a client cannot determine actual private use. Motor vehicle logbooks provide the most defensible basis for apportionment.
Common miscoding mistakes that create BAS risk
1. Bank fees coded as FRE instead of INP
As noted above, this is the most frequent error in practice. Bank fees, merchant fees, and other financial charges are input-taxed — code them INP, not FRE. The practical impact is often nil for a simple taxable business, but for a mixed-use business it can produce incorrect apportionment calculations.
2. Mixed-use purchases with no G15 adjustment
A client who uses a mobile phone 60% for business and 40% personally should have the full purchase coded G11 (or CAP for the handset) with a corresponding G15 entry for the 40% private component, or the purchase should be split at the point of entry. Many bookkeepers code the full amount as G11 and claim the full ITC — this overstates credits by the private-use fraction.
The correction process matters at BAS time: the ATO expects the apportionment to be applied consistently across periods, not corrected arbitrarily.
3. Uber and rideshare — driver status determines the code
For a passenger (business travel), a rideshare receipt is coded G11 if the driver is GST-registered and has charged GST. Uber Australia's tax invoices include GST; standard ride receipts do not always show the GST breakdown clearly — check the tax invoice.
For a driver, rideshare income has its own complexity: drivers are required to register for GST regardless of turnover, so ride income is G1 and vehicle expenses are G11 (subject to apportionment).
Coding a rideshare fare as N-T or FRE when a valid tax invoice exists overstates the ITC entitlement or understates reportable purchases.
4. Staff reimbursements follow the underlying expense
When a business reimburses an employee for a business expense — fuel, a work dinner, office supplies — the GST code is not determined by the reimbursement itself. It is determined by the nature of the original expense. A reimbursed fuel receipt for a registered vehicle used for business is G11. A reimbursed taxi fare is G11 (if a tax invoice was obtained). A reimbursed ASIC filing fee is N-T.
The error is to code all reimbursements N-T or FRE. Without the underlying invoice attached, there is no basis for an ITC claim — the ATO requires a valid tax invoice for credits above $82.50.
5. Insurance premiums — not INP
General insurance (business insurance, public liability, vehicle insurance) is a taxable supply in Australia — it is coded G11, not INP. Life insurance and income protection insurance are input-taxed (INP). Health insurance is input-taxed (INP). Confusing these costs the client ITCs they are legitimately entitled to on business insurance or, conversely, generates an incorrect ITC claim on personal insurance policies.
How AI coding handles GST codes
Manual GST coding at scale — across hundreds of transactions per client, per period — is error-prone not because bookkeepers lack knowledge but because attention is finite. A miscoded transaction on day one of a quarter is often not caught until BAS review, by which point correcting it requires a journal entry and an explanation.
AI-assisted coding tools like Reconlink approach the problem differently. Rather than presenting every transaction for manual review, the system applies a trained model to each transaction and proposes a code based on vendor name, transaction description, historical patterns, and the client's industry. The bookkeeper reviews exceptions and flags, not the full ledger.
For recurring vendors — bank fees, software subscriptions, insurance, payroll — the coding rule is applied automatically from the first import. For new vendors, the AI model draws on its training data to propose a code, with a confidence score. Low-confidence transactions are queued for review.
The practical effect is that common errors — bank fees as FRE, ATO payments as G11 — are caught at the point of coding rather than at BAS review. The bookkeeper's attention is directed at genuinely ambiguous transactions rather than routine ones.
Reconlink also flags period-level anomalies: if G10 (capital acquisitions) spikes in a period without a corresponding asset addition in the register, the system surfaces that for review before the BAS is lodged.
Frequently asked questions
What is the difference between FRE and N-T in Australian bookkeeping?
FRE (GST-free) applies to transactions where GST is not charged by law — health, basic food, exports. The transaction still appears in the BAS at G15 (total purchases). N-T (not reportable) applies to transactions outside the GST system entirely — ATO payments, super, wages. N-T transactions do not appear anywhere on the BAS. The distinction matters for businesses with mixed supply profiles where ITC apportionment applies.
Can I claim an ITC on an INP-coded transaction?
No. Input-taxed supplies do not carry GST, so there is no GST component to claim. This contrasts with FRE transactions, where GST is not charged but the business may still claim ITCs on costs it incurred to make the supply (subject to the apportionment rules).
What GST code do I use for PayPal and Stripe fees?
Payment processor fees — PayPal, Stripe, Square — are financial supplies and are input-taxed. Use INP. No ITC is available. This applies to the fee charged by the payment platform, not to the underlying sale, which retains its own GST treatment.
How do I code a purchase that is partly business and partly private?
You have two options. First, split the transaction at entry — code the business portion G11 and the private portion either N-T or to a drawings account. Second, code the full amount G11 and create a corresponding G15 entry for the private-use proportion. Either method produces the correct ITC claim; the split method is often cleaner for audit purposes because the private component is explicitly excluded rather than backed out.
What happens if I lodge a BAS with miscoded transactions?
The ATO may issue an amended assessment requiring repayment of any overclaimed credits, plus the general interest charge (GIC) calculated from the original lodgement date. Intentional or reckless miscoding attracts a shortfall penalty of 25–75% of the tax shortfall. The ATO's voluntary disclosure provisions reduce penalties where errors are corrected before an audit commences — if a systematic coding error is identified, lodging a revised BAS promptly is better than waiting.
Preparing your BAS after getting the codes right
GST coding is the input; BAS preparation is the output. Once every transaction in the period is correctly coded and the bank account is reconciled, BAS preparation becomes a verification exercise rather than a discovery exercise. Our BAS Preparation Checklist for Australian Accounting Practices covers the four-stage process — from client setup through to post-lodgement tasks — that practices use to move from reconciled data to lodged BAS with confidence.
This post is general information only and does not constitute tax or legal advice. GST rules are subject to legislative change. Confirm current obligations with the ATO or a registered tax agent.