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GST and tax on merchant fees and EFTPOS terminals: what to check
How to tell whether your merchant fees and terminal rental include GST, when you can claim GST credits, how card fees are deducted, and how GST on your sales interacts with card fees.
Whether your merchant fees include GST depends on what your provider is supplying and how it treats it, so the document to rely on is your tax invoice or monthly statement. Many providers state that their merchant fees and charges include or attract GST unless the tax invoice says otherwise, and terminal rental and equipment are generally taxable supplies. The GST Regulations list a payment system, including access to it and related services a participant supplies to a third party and the processing of card transactions, among the supplies that are not financial supplies, which is consistent with merchant fees generally being taxable rather than input taxed. Some other bank charges are treated as input-taxed financial supplies, which carry no GST and no credit. If you are registered for GST, you can generally claim a GST credit only for GST shown on a valid tax invoice. Card fees are normally a deductible business expense. Because the treatment can vary, confirm anything unclear with the Australian Taxation Office (ATO) or your tax adviser.
This guide is part of the overview of merchant payment processing fees. It is general information, not tax advice.
Three separate GST questions
| Question | Where to look | Typical outcome |
|---|---|---|
| Does my sale include GST? | Your own pricing and the GST Act rules for your products | You owe GST on taxable sales, whatever the payment method |
| Does the provider's fee include GST? | Tax invoice or statement from the provider | Check each fee line; many providers show GST on merchant and equipment fees |
| Can I claim the GST on the fee? | Your GST registration and the tax invoice | Generally yes if registered, the fee is for your business and GST is on a valid tax invoice |
GST on your sales is not affected by the card fee
When a customer pays $110 for a taxable item, $10 is GST you owe the ATO, whether they pay in cash or by card. The card fee is charged on the full $110, but you cannot reduce the GST you owe by the fee. Illustrative example:
- Sale including GST: $110.00
- GST payable on the sale: $110 ÷ 11 = $10.00
- Card fee at an illustrative 1.2%: $1.32
- Amount settled to you: $108.68
- After GST: $98.68, of which $1.32 is a business expense (and part of it may be a GST credit, see below)
Before 1 October 2026, businesses that surcharged had to account for GST on the surcharge as part of the price of a taxable sale. With surcharging on eftpos, Mastercard and Visa cards removed, that issue now arises only for any remaining charges you are permitted to apply.
Reading GST on a merchant statement
- Find the tax invoice. Many providers issue the monthly statement as a tax invoice. It should show the provider's ABN, the date, a description of what was supplied and the GST amount or a statement that the total includes GST.
- Check each line. Transaction fees, terminal rental, gateway fees, chargeback fees and PCI compliance fees may be listed separately with their own GST status.
- Record the GST credit. Illustrative: monthly fees of $330 including GST contain $30 of GST ($330 ÷ 11). If registered, you would generally claim $30 as a credit and expense $300.
- Watch for nil-GST lines. If a line shows no GST, do not claim a credit for it. It may be an input-taxed financial supply or a GST-free item.
- Keep the records. Keep statements and invoices for at least five years, as for other business records.
Equipment: renting or buying terminals
| Arrangement | GST | Income tax |
|---|---|---|
| Terminal rental | Usually a taxable supply; GST on the tax invoice | Rental is generally deductible when incurred |
| Buying a terminal outright | GST on the purchase price; credit if registered | A depreciating asset; small businesses may be able to use the ATO's simplified depreciation rules and the instant asset write-off where available |
| Terminal included in a subscription plan | Check how the invoice splits the fee | Generally deductible as part of the service fee |
The instant asset write-off threshold and its end date have changed several times. Check the current rules on the ATO website before you rely on an immediate deduction. See renting versus buying terminals.
Overseas providers
Some online payment and software providers are based overseas. If an overseas business supplies you with services and you give it your ABN and confirm you are registered for GST, it may not charge you GST, and the reverse charge rules may apply in some cases. If an overseas provider charges you GST, check whether it has issued a tax invoice; suppliers registered under the simplified GST system generally do not issue tax invoices, which means you generally cannot claim the credit. Ask your tax adviser about your situation.
Income tax: card fees as an expense
Merchant fees, terminal rental, gateway charges and chargeback fees incurred in running your business are generally deductible business expenses. A chargeback itself is usually a reversal of a sale rather than an expense: you lose the sale revenue and the fee is the expense. Talk to your accountant about how to record chargebacks and refunds in your accounting software.
Frequently asked questions
Are merchant fees input taxed because they are financial services?
Generally not. The A New Tax System (Goods and Services Tax) Regulations 2019 (section 40-5.12, item 4, with examples in Schedule 3) treat a payment system, access to it and related services supplied to third parties such as merchants, and the processing of card transactions, as not being financial supplies. Providers' own fee schedules commonly state that their merchant fees include or attract GST unless the tax invoice says otherwise. Other bank charges may be input taxed. Follow the tax invoice and ask the ATO or a tax adviser if unsure.
My provider is overseas and charges no GST. Is that right?
It can be, depending on whether you gave your ABN and registration status and how the provider is registered. Ask the provider and your tax adviser.
Can I claim GST on a terminal I bought from a marketplace seller?
Only if the seller is registered for GST and gives you a valid tax invoice showing GST.
Sources
- Australian Taxation Office — GST credits, tax invoices, input-taxed sales, depreciation and the instant asset write-off
- Federal Register of Legislation — A New Tax System (Goods and Services Tax) Act 1999 and the GST Regulations 2019 (section 40-5.12 and Schedule 3)
- business.gov.au — GST registration and record keeping
- Tax Practitioners Board — check that a tax agent is registered
