One job, two timelines
A bathroom fit-out. You invoice $11,000 including $1,000 GST on 20 June. The customer pays on 15 July — twenty-five days later, which is nothing unusual, except that a quarter ends in between.
Cash basis
GST follows the payment
Accrual basis
GST follows the invoice
That is the whole difference. Same $1,000, three months apart, and on the accrual side there is a version of the story where the customer pays in September and you have already funded their GST.
Side by side
| Cash basis | Non-cash (accrual) basis | |
|---|---|---|
| GST on sales | In the period you are paid | In the period you invoice (or are paid, if earlier) |
| GST credits on purchases | In the period you pay for it | In the period you get the invoice (or pay, if earlier) |
| Who can use it | Generally aggregated turnover under $10 million | Anyone — and required at or above $10 million unless the ATO permits otherwise |
| Unpaid invoices | Never cost you GST until they are paid | You pay their GST on time regardless |
| Buying on credit | Claim the GST credit when you pay | Claim it when you get the invoice — earlier |
| Matches your bank account | Yes | No |
| Bad debts | Nothing to unwind — you never reported it | You reported the GST; a written-off debt has to be adjusted later |
Source: the ATO's choosing an accounting method guidance, read August 2026. Eligibility depends on your circumstances — check the current page.
Three tradies, three answers
1 · The one who invoices big and waits
A builder's subbie invoicing $40,000 a month to head contractors on 30 to 45 day terms. On accrual, every quarter's GST is due on work that is still sitting in someone's payment run. On cash, the GST arrives when the money does. Cash, almost every time — and this is the most common tradie shape.
2 · The one who gets paid on the day
A domestic sparky doing service calls, tapped-and-paid before leaving the driveway. Invoice date and payment date are the same day, so the two methods produce almost identical BASs. Either — and the tiebreaker is convenience. If they buy materials on a trade account, accrual lets them claim the GST credit in the quarter of the invoice rather than waiting for the statement, which for a high-materials trade is a small but real advantage.
3 · The one buying a $66,000 ute on finance
$6,000 of GST in the purchase. On accrual the credit is claimable in the quarter the invoice is dated. On cash — where the vehicle is bought under a finance arrangement — when you are treated as having paid depends on the type of arrangement, and it is not always the day you sign. This is the one to ask your accountant about before you buy, not after; the answer can move $6,000 by a quarter, and there are separate rules for cars that are worth knowing about anyway.
Changing method
You generally choose your method when you register for GST, and you can change it later if you are eligible for the one you are moving to. A change takes effect from the start of a reporting period rather than mid-quarter, and there are transitional rules so the same sale is not counted twice or missed entirely — that adjustment is precisely the part worth having your accountant do once, properly. Check the ATO's current guidance on changing methods before you switch, and do not simply start reporting differently.
How this shows up on your BAS
It does not change the labels. You still report G1 total sales, 1A GST on sales and 1B GST on purchases. What changes is which invoices belong in which quarter — which is why the method is the first thing to settle before you fill anything in. If this is your first one, start with your first BAS, explained.
See the GST on every job as you go — Yamate keeps it current →Yamate records the GST on every invoice you raise and every expense you enter, so you are not reconstructing a quarter from a glovebox in October. It is an estimate to prepare from — Yamate does not lodge your BAS and this is not tax advice. Sign up before 30 September 2026 and lock in the Founder plan at $19/mo — forever. It's $29/mo after that. No lock-in, cancel anytime. Prices in AUD.
FAQ
What is the difference between cash and accrual GST?
On a cash basis you account for GST in the period you receive payment and in the period you pay for purchases. On a non-cash or accrual basis you account for it in the period the invoice is issued or received, whether or not money has moved.
Who can use cash accounting?
Generally businesses with an aggregated turnover under $10 million. At or above that you generally must use the non-cash basis unless the ATO gives you permission.
Does cash accounting mean less GST?
No — it changes when it falls due, not how much. Over time the same GST is paid either way.
Which is better for a tradie?
For most small tradies who invoice on completion and wait to be paid, cash avoids paying GST on money not yet received. Accrual can suit a business paid at the time of work, or one making large credit purchases that wants the GST credit sooner. Ask your accountant before choosing.
Can I use cash for GST and accrual for income tax?
They are separate questions with separate rules, and the answer depends on your circumstances. This is exactly the sort of thing to put to your accountant rather than assume either way.
What happens to GST on an invoice that is never paid?
On cash, nothing — you never reported it. On accrual you already reported the GST, so writing the debt off generally means making an adjustment on a later BAS to recover it.
Related
General information for Australian businesses, not tax advice. Eligibility, transitional adjustments and the treatment of finance arrangements all depend on your circumstances — check the ATO's guidance or talk to your accountant or a registered BAS agent before changing anything. This page describes the position as read in August 2026.