TPAR and prepaid deposits

Sandra_10124565 Member Posts: 29

Need help explaining how to approach the following scenario so that it works with the TPAR!

Sometimes we have to pay a deposit to our Taxable Payments contractors to lock them in for a job. They don't issue an invoice for this deposit; the invoice is only issued once the work is complete.

Say for example we need to pay a $4,000 deposit on an $11,000 contract. The method I've been following to do this is:

  1. Write a cheque to the Supplier for the deposit amount; say for example $4000. Put this to "Accounts Payable", and list the supplier's name in the Customer:Job column. No GST is recorded as part of this deposit because we do not have a tax invoice yet.
  2. Enter the bill as normal when the work is complete and the invoice is received for the full amount: say $10,000 net plus $1,000 GST.
  3. Pay the bill via the Pay Bills screen. There is a $4,000 credit available which is applied against the bill, leaving $7,000 to pay.

This worked well I thought. The GST was all accounted for properly (we're on accrual system for GST), the bill recognised as fully paid.

But now when I am preparing the TPAR, I realise that because the TPAR is on a CASH basis, it doesn't recognise the GST as being fully paid for these transactions. Using the above example, it is reporting that I have paid $11,000 gross but only recognising GST of $636.36 being paid ($7,000 / 11); not the full $1,000.

So clearly my system doesn't work (for TPAR suppliers at least).

How else could I enter these deposits so that the GST is reported correctly on the TPAR? Or once I receive the bill, do I have to go back and change the initial deposit transaction so that it is a direct Bill Payment instead? (Which might not matter if it is all within the one BAS reporting period, but is probably not correct if they are in different periods; GST will be incorrectly reported and/or claimed).

Or do I need to hack into the TPAR file before I lodge it with the ATO and manually change the tax figure for those suppliers (no idea if this will crash the file or not!)


  • JudyA
    JudyA Member Posts: 53 ✭✭✭

    Hi Sandra,

    Don't you love the TPAR report?!

    The issue you are having is the TPAR is only looking at payments made, not the bills from your supplier. Since you only paid $ 7000 that had GST associated with it, that's all it's picking up. It's still reporting the correct total amount from the two cheques though, just not the correct GST.

    I had a bit of a play around with your entries and instead of a cheque in step one, I just entered a transfer from the bank account to a balance sheet account, called Deposits paid. Then entered a journal to link that to the supplier and the trade creditors account. Paid the bill and ran the TPAR, but I still had the same issue as you with the GST amount paid.

    Hopefully someone more cluey than me will be able to solve your issue for you. Best of luck.

  • Sandra_10124565
    Sandra_10124565 Member Posts: 29

    Thanks for your efforts Judy!

    Yes I love being the ATO's lackey :/ !

  • Ageoftaxation
    Ageoftaxation Reckon Staff Posts: 14 Reckon Staff
  • Sandra_10124565
    Sandra_10124565 Member Posts: 29

    Thanks for that Ageoftaxation. That explains why it is happening and it clarifies that ALL payments to a Taxable Payments supplier must be via the Bill Payments method (or similar, where the tax is listed) to correctly post through to the TPAR.

    The solution in that article doesn't seem to reference a fix for my situation of needing to pay a deposit to suppliers sometimes months in advance of receiving any invoice. I cannot use the Bill Payments for this as - because no invoice has been raised by the supplier - I am not paying any GST at that time.

    Using the Clearing Account suggestion in your article, below is what I have done. But it is still imperfect; I have to manually adjust the TPAR at the end or it double-reports payments.

    1) Write Cheque for the initial deposit to be paid. Account: AC Payable, Customer: Supplier X

    2) Enter invoice from Supplier X when it arrives

    When paying the balance owing:

    3) Make Deposit to the Clearing Account for the initial deposit amount. Rcvd from: Supplier X. From Account: AC Payable

    4) In Pay Bills, "Pay" this deposit against the actual deposit cheque written in Step 1 (no payment will be needed as they equal each other). This marks the bills as paid.

    5) In Pay Bills, pay the full amount of Supplier X's invoice from the Clearing Account.

    6) Write Cheque from normal bank account for the balance that is actually payable to Supplier X. Account: Clearing Account. (This clears the clearing account and is the payment that will be sent to Supplier X).

    7) When preparing the TPAR, need to click through into Supplier X's details and deselect the initial deposit cheque and the final payment cheque, leaving only the invoice and its Bill Payment. Otherwise Gross shows as double what it should be.

    If all the payments were within the one BAS reporting period, it would be easier to go back and put both payments as part Bill Payments. But this isn't an option if the payments cross reporting periods.

    Tagging the deposit payment to Accounts Payable and then crediting it back out again perhaps could be missed, but it allows for identification of the prepayment within Accounts Payable until such time as the work is actually done so it isn't forgotten.

    But if anyone can think of a better procedure than this, I'd love to hear it!