Insights · GST and BAS ·
GST on progress claims and retentions
In construction, GST timing follows your invoices and your accounting basis, not when the job finishes. Getting it wrong is a common cause of BAS surprises.
Cash vs accrual
Businesses with GST turnover under $10 million can usually choose to account for GST on a cash basis: you report GST when you are paid. On an accrual (non-cash) basis, you report GST in the period you issue the tax invoice, whether or not you have been paid.
Progress claims
Each progress claim is generally a separate supply. On an accrual basis, GST is payable in the BAS period you issue the invoice for that claim. If the client pays late, you may have paid the GST before receiving the money.
Retentions
Retentions held back by a head contractor often create a timing gap. How and when GST is accounted for depends on the contract terms and your accounting basis. Get advice on your contracts.
Variations
Approved variations are generally additional consideration and carry GST when invoiced (accrual) or paid (cash).
Keep GST in a separate account; see Cash flow and BAS habits.
Quick answers
Can a construction business use cash-basis GST?
Generally, if GST turnover is under $10 million, per the ATO’s small business concessions.
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General information only. This doesn’t take your circumstances into account and isn’t tax, financial or legal advice. Talk to your accountant or registered tax agent before acting. PRM is not a registered tax agent; tax agent services are provided by Australian Tax & Super Pty Ltd (TPB 25291395).