I wanted to address a common question regarding the differences between "GST-Free (0%)" and "Out of Scope (0%)" codes in QuickBooks, especially when handling purchases that are GST-free.
When you mark a transaction as GST-Free (0%), it means that while no GST was charged, this transaction will still be reported on your Business Activity Statement (BAS). It's the correct choice for purchases where you haven’t been billed GST or if you’re claiming GST credits.
On the other hand, if you classify a purchase as Out of Scope (0%), it indicates that the transaction will not be included in your BAS. This code applies to transactions tied to assets, liabilities, or equity accounts, as well as for wages and superannuation payments. It’s especially useful for expenses where no GST is applicable at all.
If you're dealing with GST-exempt transactions like medical services or residential rental properties, it's wise to consult a ProAdvisor or accountant. They can make sure you're using the correct codes for your unique situation.
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