16 Jul 2022

Are transaction fees subject to GST?

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The goods and services tax (GST) is charged to almost all services and products in Australia, including merchants and customer transactions. In other words, there are transaction fees with GST added, as well as merchant fees depending on the type of payment.

Transactions occur between a customer and a business, which means that the customer is offered a good or service that is subject to the average GST. Some stores add the GST to the total price displayed on their websites and in their stores to be as direct as possible. The GST is also hardly noticeable with transaction fees since the fees are small.

There are exceptions, though, to every rule. Not all transactions or purchases are subject to GST. For instance, any bank or financial institution that charges fees cannot charge a GST. When using a credit facility like a store credit card, there is always a service fee that is charged to the account, not including the total amount of the purchase. The purchase includes the sales tax of the items and on the credit facility statement, the GST is added.

If you have a credit facility and pay transaction fees, it is good to use online and mobile applications to check the total balance and status. Sometimes added fees are not necessary and should be brought to the attention of the credit facility as soon as possible.

Transaction Fees and GST Conclusion

Overall, you won’t have to worry about paying goods and service taxes on financial institutions like banks or lenders. However, transaction fees do have added GST since you are purchasing a good or service using a merchant credit card.

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