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Assets – How to Set up & Record, and the GST consequences
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Published on Thursday, 28 February 2013 12:56
The way an asset is handled depends on GST/NCG reporting method you use on your BAS, and the type of loan/finance that is used:
(Depending on the software used, tax codes are given here as MYOB/Quickbooks format in the text)
** Note that from 1 Jul 2012 with cash reporting you can now claim GST upfront – for more go HERE
The code will be the CAP/CAG (Capital) tax code so that the full asset can be separated and put in the G10 section of the BAS, and the CAP/CAG tax is all included with the GST/NCG paid at 1B.
Eg Computer (or equipment, car, etc) purchased
$5,500 inc GST/NCG, pay over 2 years, term charges (interest) $800 over the 2 years, total loan therefore $6,300.
There also may be stamp duty and establishment costs.
When setting up accounts, check what is there first in the system, and note the order and number and determine the best place to put the account (ie: account number and section – long term asset/liability, expense, see below).
All numbers and names are examples – check your chart first!
1. Quickest Easiest Method:
(If unsure and let the accountant sort it out at year end)
Create a Long Term Liability Account calling it: (Finance Co. Name) Computer HP (or Ch Mortgage)
Eg
- 2.5100 (Finance Co. Name) Computer HP Ch Mortgage
- And post all payments as Spend Money to that 2.5100 in the allocation section underneath using GST/NCG tax code. Put “Fin. Co Computer” (asset/equipment) in the memo for easy reference. Save as recurring so you have it ready for next time each month. You claim some GST/NCG as you go, and sort out the balance at year end. If GST/NCG is claimed upfront, then following years, change to N-T code monthly.
2. Accounting Method - To Set Up the Accounts:
GST/NCG Upfront on Purchase
** To get the Term Charges, which will change as the principal is paid down, get a free amortization schedule by emailing us
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. This will mean editing the transaction each month to adjust for the charges. The Term charges will decrease until they are all gone over the payments of the loan.
Or you can use the same amount for each payment, although not strictly correct, and the tax agent at year end can keep their detailed record for the business, which is usually the case.
