Flat-rate credits and income tax

If you receive flat-rate credits, you can choose to include them as assessable income in your income tax return or to treat them as excluded income.

Including flat-rate credits as assessable income 

If you choose to include your flat-rate credits as assessable income, you can claim expenses relating to the sale of your listed services on a GST-inclusive basis. 

If you sell your listed services through an online marketplace and you also sell your listed services in other ways (for example, through your own website), you may want to choose this option to help save time and effort.

Using this option you do not need to split your expenses between those related to online marketplace sales and those related to sales made in other ways.   

When you can include flat-rate credits

You can only include flat-rate credits as assessable income if you were not registered for GST when you received them. This means if you registered for GST part-way through the tax year, you can choose to include the flat-rate credits you received as assessable income in your income tax return up until the date you became GST-registered.

Excluding flat-rate credits from assessable income

If you choose to treat your flat-rate credits as excluded income, working out your expenses may be more complicated.

Claiming expenses for income earned

Claim expenses relating to income earned through an online marketplace on a GST-exclusive basis. This is because the flat-rate credits you got from the online marketplace recognises the GST on your costs to earn this income.

Claim expenses relating to income earned in other ways (for example, through your own website), on a GST-inclusive basis.

Splitting expenses for income earned

Expenses relating to income earned from the sale of listed services made partly through an online marketplace and partly in other ways, need to be split.

• Claim the part of the expenses relating to online marketplace sales on a GST-exclusive basis.
• Claim the part of the expenses relating to sales made in other ways on a GST-inclusive basis.   

For more information including examples, read our Flat-rate credits and income tax – AD283 factsheet.

Keeping records 

You must keep records showing your calculations and the method you have used to split your expenses. You do not need to send your records or working papers with your income tax return, but you must keep them in case we want to see them.

Receiving flat-rate credits when you are GST registered

If you receive flat-rate credits when you are GST registered, you will need to pay them to us by making a debit adjustment in your GST return. If you continue to receive flat-rate credits incorrectly, we may charge you penalties.

You must also tell your online marketplace you are GST registered.

You cannot choose to include flat-rate credits as assessable income if you were GST registered when you received them.