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Bookkeeping – The tax amounts on the Balance Sheet don’t match those of the GST reports - Why?
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Published on Monday, 15 December 2014 15:45
A client had a emailed a question about the GST Collected & Paid amounts comparing Balance Sheet to GST reports
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The end of year Balance Sheet tax amounts shows don’t match those to the GST Accrual (& Cash) reports. Why?
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We thought that the GST Liabilities section of the Balance Sheet gets automatically updated when you enter a Spend Money purchase or raise a Sales invoice. Is this the case?
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Or do we have an allocation issue in our MYOB account set ups that we need to fix?
The answer - The amounts in the GST accounts are based on the way the transactions are created, and depend on whether you use cash recording (cheques and deposits or cash receipt sales) or accrual recording (invoice sales and purchases or bills).
CASH transactions record revenue sales and expenses when the actual CASH is received and paid, ie WHEN PAID (date). The GST accounts will have the exact GST amount for each transaction.
ACCRUAL transactions record revenue sales and expenses when the TRANSACTION occurs, not when paid. The GST accounts will have the GST from the invoice or purchase.
When reporting tax amounts for a period, keep in mind the way transactions are entered, as the GST on sales and the GST on purchases will not be picked up if reporting on Cash basis, and are not paid in the time frame. If they were paid, they would appear in the report at the invoice/purchase date, not when paid.
Always check on screen the GST Detail reports to see what transactions are picked up for the period, and after checking, if satisfied, PRINT to keep a record, then print the GST/Tax summary report.
The balance of the tax accounts continually change, as we post the amount reported to the ATO to the accounts for BAS, reducing/increasing the account to reflect what is reported and paid (or refunded). So a tax payment during the period reported also changes the Balance Sheet amount. Look through the detail of the transactions in the tax accounts, and see what has occurred, to understand what is being reported
See also Cash and Accrual – will there be Debtors (Accounts Receivable – AR) and Creditors (Accounts Payable – AP)?
And for a quick summary of the reports suggested to check and use to prepare a BAS, go to MYOB – Aust. BAS Checks Reports & Entries or Quickbooks/Reckon – Aust. BAS Checks & Reports & Entries
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