GST Refunds in Australia (2026): How BAS Refunds Work

A GST refund is one of the few times the ATO sends money the other way. For a start-up buying equipment, an exporter selling GST-free, or a business that made a big capital purchase, the refund on a business activity statement (BAS) can be a meaningful cash injection — if it arrives on time. This guide explains, for Australian business owners and bookkeepers, when a BAS produces a GST refund, how long the ATO can hold it in 2026, why it might be smaller than expected, the interest you're owed on delays, the four-year limit on claiming credits, and a short note on the Tourist Refund Scheme for travellers.

Quick answer

You get a GST refund when the GST credits on your business purchases (BAS label 1B) are more than the GST on your sales (1A) for the period. The ATO pays it to your nominated Australian bank account, usually within about two weeks — but it can retain a refund for checking and, for BAS lodged from 1 July 2025, has up to 30 days to tell you.

• Refunds are automatically offset against other tax debts first, then other Commonwealth debts

• No refund is paid until every earlier BAS is lodged and your bank details are valid

• Legitimate refunds held more than 14 days earn delayed refund interest

• GST credits expire 4 years after the due date of the BAS where you could first claim them

• Tourists claim GST back separately through the Tourist Refund Scheme (min. A$300 per ABN)

When does a business get a GST refund?

Once you're registered for GST — compulsory when your GST turnover reaches A$75,000 — every BAS nets two figures against each other. Label 1A is the GST you charged on taxable sales: one-eleventh of the GST-inclusive price at the 10% rate. Label 1B is the GST you paid on business purchases that you're entitled to claim back as GST credits. If 1B is bigger than 1A, together with any other credits and liabilities on the form, the ATO owes you the difference. That surplus is your GST refund.

Refunds are most common in five situations:

• Start-ups and expansions. Fit-out, equipment, stock and vehicles all carry GST credits, while sales are still building.
• Exporters. Exports are GST-free, so there's no 1A on most sales, but the GST paid on local inputs is still claimable.
• Big capital purchases. A new truck, machine or commercial property can swamp a quarter's GST on sales.
• Businesses making mainly GST-free sales, such as fresh food wholesalers or some health practitioners, who still pay GST on rent, equipment and services.
• Correcting earlier mistakes, where you missed credits or overpaid GST and fix it on a later BAS.

Don't confuse a GST refund with being input-taxed. If you make input-taxed sales, such as residential rent or most financial supplies, you don't charge GST on those sales and generally can't claim credits on the related purchases either.

Worked example: a café's first quarter

Mia opens a café in Geelong on 1 July and registers for GST from that date, reporting quarterly on a cash basis. In the July–September quarter:

Mia lodges online by the 28 October, 28 February, 28 April and 28 July due dates — here, 28 October. Assuming no other debts, the A$5,000 is a credit on her integrated client account and is refunded to her nominated bank account.

Two things could change that outcome. If Mia also owes A$1,200 on an income tax assessment from her previous sole-trader business, the ATO will offset that first and refund A$3,800. And because a first BAS with a large refund from a new registration fits the ATO's risk profile, it may ask for evidence before releasing the money — so Mia should keep the fit-out invoices, her accounting transaction listing and bank records showing she actually paid.

To check the GST inside any receipt, divide the GST-inclusive price by 11 or use the calculator below.

Try it — find the GST credit in a A$99,000 fit-out

Add TaxRemove Tax

AmountTax Rate

10% (GST)0% (GST-free)

Net Amount (Before Tax)$90,000.00

Tax (10%)$9,000.00

Gross Amount (Including Tax)$99,000.00

Open the full GST Calculator (PDF, save, compare)

How long does a GST refund take?

The ATO doesn't publish a single service standard for every BAS refund, but in practice a refund that passes its automated checks is usually paid within about two weeks of lodgment, once the BAS is processed. Lodging online — through Online services for business, your accounting software or a registered agent — is faster than paper.

The bigger question is what happens when the ATO wants to look more closely. Under the BAS retention framework, the ATO can hold back a refund to verify it. For any BAS lodged on or after 1 July 2025, it has up to 30 days from lodgment to notify you that it's retaining the refund. Before that date the window was 14 days. The change came from the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2024 and was aimed at high-volume refund fraud, after the ATO dealt with schemes that used fake or hijacked businesses to claim GST refunds.

If the ATO doesn't contact you within the 30 days, it must release the refund on day 31, though it can still review the BAS later. If it does notify you and keeps holding the refund for 60 days after the end of that notice period, you can lodge an objection against the decision to retain it.

What happens after you lodge a refund BAS

Day 0

BAS lodged online; ATO matches it against its data and risk models

About 2 weeks

Typical payment for refunds that pass automated checks

Day 14

Delayed refund interest starts on legitimate refunds still unpaid (if you've lodged everything and given bank details)

Day 30

Last day for the ATO to tell you it's retaining the refund

Day 31

Refund released if no retention notice was sent

Notice period + 60 days

You can object if the ATO is still holding the refund

Why the ATO keeps or reduces a refund

The ATO lists four reasons a refund may not arrive, or may arrive smaller than expected.

1. Offsetting. Generally automatic. The ATO uses a credit on one account to pay a debt on another — first your other ATO accounts, such as income tax, fringe benefits tax or older BAS debts, including debts previously put on hold, and then debts you owe other Commonwealth agencies, for example Services Australia. It doesn't have to offset amounts that are due but not yet payable, debts under a payment arrangement you're keeping to, debts where it has agreed to defer recovery, and debts relating to director penalties. If one of these applies, contact the ATO before or when you lodge so the refund isn't swallowed by a debt you're already paying off.

Since 1 January 2022, automatic offsetting also applies across GST branches and GST joint ventures. A refund on one branch's account will first clear debts on the parent entity's other branch accounts, then its income tax and FBT accounts.

2. Missing or wrong bank details. The ATO keeps the refund until you nominate a valid Australian financial institution account. Check the account in Online services for business or ask your registered agent to update it, especially after changing banks.

3. Outstanding activity statements. No refund is paid while an earlier BAS is outstanding. If your June BAS shows a refund but your May BAS hasn't been lodged, nothing moves until May is in. The ATO may release a refund early if holding it would cause serious financial hardship or threaten the business's viability, but you have to ask and show evidence.

4. Verification. The ATO checks your BAS against what it already knows and may contact banks, employers, customers and suppliers. Expect requests for:

• copies of the tax invoices behind the largest GST credits;
• your accounting transaction listing for the period;
• bank statements or other proof of payment, including where the money came from.

Getting a refund released faster

Most refund delays are self-inflicted. A few habits help the BAS sail through:

• Lodge every BAS on time, including nil ones. A single missing period blocks the refund on every later one.
• Keep valid tax invoices. For purchases over A$82.50 (GST inclusive) you need a tax invoice to claim the credit. If the supplier hasn't given you one, ask — they must provide it within 28 days of your request.
• Match credits to payments. If you account on a cash basis, you can only claim credits for what you've actually paid in the period. Claiming the whole cost of a fit-out paid in instalments is a classic trigger for a review.
• Explain unusual refunds up front. If you've just bought A$300,000 of equipment, put a note in your records and be ready to send the contract and invoice. A registered agent can contact the ATO proactively.
• Consider monthly reporting. If you're regularly in refund, as many exporters are, you can choose to lodge monthly instead of quarterly so refunds arrive sooner. Monthly BAS are due on the 21st of the following month. Businesses with GST turnover of A$20 million or more must report monthly anyway.

Before you lodge a refund BAS

0/7

• All earlier BAS and returns lodged
• Bank account for refunds confirmed in Online services for business
• Tax invoices held for every purchase over A$82.50 claimed at 1B
• Proof of payment for large purchases (cash-basis reporters)
• Capital purchases separated from running costs in your records
• Any payment plan or deferral flagged to the ATO
• A short explanation ready for any unusually large refund

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Interest on delayed GST refunds

If the ATO holds a legitimate BAS refund too long, it pays delayed refund interest (DRI). DRI applies to a surplus on your running balance account that comes from a BAS amount, such as GST, PAYG withholding or PAYG instalments, and to some related penalty remissions and voluntary payments.

The interest clock starts 14 days after the latest of these: you've lodged all outstanding activity statements with the required information; you've given the ATO everything it needs to process them; and you've provided bank account details for the refund. In other words, the ATO doesn't pay interest for delays you caused.

The rate is the ATO's quarterly credit interest rate — the base interest rate, without the uplift added to the general interest charge you pay on debts. It was 4.43% a year for July–September 2026. For October–December 2026, the GIC is 11.51%, and because the GIC is the base rate plus 7 percentage points, that implies a credit rate of about 4.51%. Interest is calculated daily as amount × rate × days ÷ 365.

Example. The ATO retains Mia's A$5,000 refund for checking and releases it 40 days after DRI started running. At 4.43%, interest is A$5,000 × 4.43% × 40 ÷ 365 = about A$24.27. The ATO calculates and pays it automatically with the refund, or offsets it against another debt. DRI is assessable income, so include it at gross interest in the tax return for the year you receive it.

The four-year time limit on GST credits

Missed a GST credit last year? You can usually still claim it — but not forever. Your entitlement to a GST credit ends 4 years after the due date of the BAS for the earliest period in which you could have claimed it, ignoring any wait for a tax invoice. After that, nothing revives it, and the ATO has no discretion to extend the limit.

This credit time limit is separate from the period of review, which is generally four years from when you lodge a BAS and is the window in which the ATO can amend it. An extension to the period of review doesn't extend the credit limit. If the credit has already expired, the ATO can't add it to an amended assessment, even if the period of review is still open.

Credit time limit vs period of review

	GST credit time limit	Period of review
What it limits	Your entitlement to claim a GST credit	The ATO's (and your) ability to amend an assessed BAS
Length	4 years	Generally 4 years
Starts from	Due date of the BAS where the credit could first be claimed	When the BAS is lodged (deemed assessment)
Can it be extended?	No — no ATO discretion	Yes, by agreement, and refreshed by amendments

What it limits

GST credit time limit

Your entitlement to claim a GST credit

Period of review

The ATO's (and your) ability to amend an assessed BAS

Length

GST credit time limit

4 years

Period of review

Generally 4 years

Starts from

GST credit time limit

Due date of the BAS where the credit could first be claimed

Period of review

When the BAS is lodged (deemed assessment)

Can it be extended?

GST credit time limit

No — no ATO discretion

Period of review

Yes, by agreement, and refreshed by amendments

The practical rules:

• You can claim an unclaimed credit on a later BAS, but that later BAS must be lodged within the time limit for that credit.
• Simply lodging a revision, voluntary disclosure or objection isn't enough. The ATO has to process it and include the credit in an assessment before the limit ends, so don't leave it to the last month.
• Refunds of overpaid GST on sales have a separate four-year limit under the Taxation Administration Act. And if you overcharged customers GST and passed it on to them, the ATO generally won't refund it to you unless you reimburse those customers.

The Tourist Refund Scheme in brief

"GST refund Australia" also brings up the Tourist Refund Scheme (TRS). It isn't a business refund, but retailers deal with it every day, so it's worth knowing how it works.

Travellers leaving Australia, including Australian residents heading overseas, can claim a refund of GST, and of wine equalisation tax on wine, on goods they take out of the country. The rules that affect your sales and invoicing are:

• purchases totalling at least A$300, GST inclusive, from a single business with the same ABN, which can be made up of several invoices on different days;
• each purchase made within 60 days before departure;
• goods only, from a GST-registered retailer — services such as accommodation, tours or car hire don't qualify;
• a valid tax invoice showing the ABN, a description of the goods, price and GST, and the buyer's details for purchases of A$1,000 or more.

The traveller presents the goods, invoices and their passport and boarding pass at the TRS facility at an international airport or participating seaport, and the refund is paid to a card, an Australian bank account or by cheque. Goods generally have to be carried in hand luggage for inspection, unless they're oversized or are liquids, aerosols and gels that must go in checked baggage. The Australian Border Force's TRS page and app give the current claim deadlines before departure.

Retailers don't process TRS refunds or adjust their own BAS for them. Your sale is reported normally with GST, and the ABF pays the refund to the traveller. All you need to do is issue a correct tax invoice — and combine multiple purchases by the same customer on request so they can reach A$300.

Common GST refund mistakes and how to fix them

Claiming GST credits without being registered. You can only claim credits for periods when you're registered for GST. If you started trading before registering, you can ask the ATO to backdate registration, generally up to 4 years. That will also make you liable for GST on sales in that period, so model both sides first.

Claiming GST on purchases that had none. Most bank fees, stamp duty, wages, residential rent and many government fees carry no GST. Claiming one-eleventh of everything is the most common reason a refund is cut back after review.

Claiming private use. If a vehicle or phone is used 60% for business, only 60% of the GST is claimable. Over-claiming private portions is a frequent audit adjustment.

Wrong accounting basis. Cash-basis reporters can only claim credits for amounts actually paid. If your turnover is under A$10 million you can choose the cash basis, but you must apply it consistently to both sales and purchases.

Ignoring an ATO letter. If the ATO retains a refund and asks for documents, answer quickly and completely. The 30 days notice period is a ceiling, not a target — refunds are often released within days of the ATO getting what it asked for.

If the mistake is in a past BAS, you can usually fix it on a later BAS when it's within the ATO's GST error correction limits, or revise the original BAS. Our BAS statement guide explains the labels.

Official links

• BAS refundRetention, offsetting, bank details, outstanding BAS
• Extending the BAS retention framework30-day notice period from 1 July 2025
• Delayed refund interestWhen and how DRI is paid
• Credit interest ratesQuarterly rates
• Time limits on GST credits and refundsThe 4-year credit time limit
• Tourist Refund Scheme (ABF)Traveller and retailer rules

What to do next

Before you lodge your next refund BAS, check that every earlier period is lodged, that your refund bank account is current, and that you hold tax invoices for the larger credits. If you're new to GST, start with our GST in Australia guide, then use the Australia GST calculator to check the GST inside your receipts and the invoice generator to issue compliant tax invoices.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

How long does a GST refund take in Australia?

Most BAS refunds are paid within about two weeks of lodging, provided all earlier BAS are lodged and your bank details are correct. If the ATO flags the refund for checking, it now has up to 30 days from lodgment (for BAS lodged on or after 1 July 2025) to tell you it's retaining it. If it doesn't, the refund is released on day 31. Legitimate refunds held over 14 days attract delayed refund interest.

Why is my BAS refund less than I expected?

Usually because the ATO has offset it. Credits are applied automatically to other tax debts first — income tax, earlier BAS, FBT — and then to debts with other Commonwealth agencies such as Services Australia. Debts under a payment plan you're keeping to, and amounts not yet due, are generally not offset. The ATO sends a notice showing where the money went.

How far back can I claim GST credits?

You have 4 years from the due date of the BAS for the period in which you could first have claimed the credit. After that the entitlement ends, and the ATO has no discretion to extend it — even if the period of review on that BAS is still open. Claim missed credits on a later BAS or by revising the original one well before the deadline.

Do I get interest if the ATO holds my GST refund?

Yes, if the refund is legitimate and the ATO pays it more than 14 days after you've lodged all outstanding BAS, supplied any information it asked for and given valid bank details. Delayed refund interest is calculated at the ATO's credit interest rate (4.43% a year for July–September 2026) and is assessable income in the year you receive it.

Can a tourist claim a GST refund in Australia?

Yes, through the Tourist Refund Scheme. Travellers leaving Australia can claim the GST on goods they carry out of the country if they spent at least A$300 (GST inclusive) with a single business (one ABN) within 60 days of departure and hold the tax invoices. Claims are made at the TRS facility at international airports and some seaports; services such as accommodation don't qualify.

Why does a new business often get a GST refund?

Because set-up costs — equipment, fit-out, stock and vehicles — carry GST credits while sales are still low. If your GST credits (1B) exceed the GST on your sales (1A), the BAS shows a refund. First refunds from new registrations are more likely to be checked, so keep tax invoices and proof of payment ready.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.BAS refund (and sub-pages: Why we have kept your refund, Offsetting, Outstanding activity statements) — Australian Taxation Office · accessed 9 October 2026
2. 2.Extending the ATO's BAS retention framework — Australian Taxation Office · accessed 9 October 2026
3. 3.We have more time to notify of retained BAS refunds — Australian Taxation Office · accessed 9 October 2026
4. 4.Checking refunds — Australian Taxation Office · accessed 9 October 2026
5. 5.Delayed refund interest — Australian Taxation Office · accessed 9 October 2026
6. 6.Credit interest rates and calculation — Australian Taxation Office · accessed 9 October 2026
7. 7.Time limits on GST credits and refunds — Australian Taxation Office · accessed 9 October 2026
8. 8.MT 2010/1 — Restrictions on GST refunds (section 105-65) — Australian Taxation Office · accessed 9 October 2026
9. 9.Tourist refund scheme — Australian Taxation Office · accessed 9 October 2026
10. 10.Tourist Refund Scheme — selling — Australian Border Force · accessed 9 October 2026
11. 11.General interest charge rates — quarter from 1 October 2026 (report of ATO announcement) — Orbitax · accessed 9 October 2026