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When to use GST Collected and GST Credits Received?

I’m a Year 11 student studying accounting, and I've been grasping the concepts we've covered so far. However, I'm starting to have difficulty with GST accounts. I would like to clarify when to use GST credits received and when to use GST collected. Specifically, do we apply GST collected when a sale is made, or do we use GST credits received for this purpose?

2 Answers

A
Anonymous

Feb 22, 2025

Yes, you use GST collected when something is sold, as you are collecting GST on behalf of the government (i.e the GST is included in your selling price). GST credits received refers to the GST credits you are entitled to claim back from the ATO from the payments you have made for inventory and other expenses/outgoings in the course of business.

A
Anonymous

Dec 07, 2024

It’s not really a refund – it is used to offset any GST collected. E.g. sales $11,000; purchases $5,500 – you will have to pay $500 GST to the ATO ($1,000 received less $500 paid). So you can see that in this situation the ATO is in fact receiving some GST. If a business is registered for GST but keeps getting refunds, it means the business is doing very badly as their outgoings are greater than their incomings.

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