A debt collection service is the collection of an outstanding sum of money for a fee which is usually charged as a percentage of the amount collected. Commission is charged on the total amount collected.

A debt collection service is not a financial service under the definition of a financial service and so GST must be charged on the debt collectors fees.

The service provided by the debt collector is simply the recovery of a sum of money, the outstanding debt. Providing the Client is legally entitled to recover the debt, the components of the debt are of no importance to the debt collector. Commission is charged at an agreed percentage on the total sum collected. GST is charged on the commission.


A business submits an outstanding debt of $20,000 to a debt collector for collection at an agreed commission of 20%. The debt is collected.

The debt collector bills the client $4,400; $4,000 Commission and $400 GST. The client pays the debt collector $4,400 of which the debt collector remits $400 GST to the ATO.

The client has an expense of $4,000 and claims the $400 GST paid on its BAS.

Assuming the debt to the client related to a taxable supply they had made then in the accounts of the client it would be recorded as Revenue of $18,182 and GST of $1,818. The breakdown to the client is irrelevant to the debt collector; all the debt collector is providing is a service to collect an outstanding debt of $20,000.