Claiming the GST on Inventory prepayment in previous period
Hi. I made a prepayment to a supplier for inventory before EOFY, and put it to an expense category account (without any GST) so it is on my P&L for tax purposes. Now I have the invoices for the goods that have arrived and want to claim the GST, but don't know how to enter them. Some of the help files say I should create an "Other Current asset" account (name it Prepaid Inventory) but if I do that then I can't claim the prepayment in the previous year as it won't show on the P&L. I am on Cash basis accounting and work in Hosted online program. Any assistance would be appreciated.
Answers
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Hi Lyndel
Are you on Cash or Accrual (Non-Cash) for GST (BAS) ?
On a Cash basis, Bill Payments - & any GST - will only report when they are allocated against a Bill. Cheques will report on either basis though.
You either need to include the NCG tax code in the original payment or enter a Bill & apply the pre-payment to it.
I enter a Chq to Accounts Payable (NO tax code) as this shows as a Bill Credit for allocation in Pay Bills - This claims the GST on the prepayment & still leaves the remaining Bill balance payable ☺️
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HI Shaz
I'm on a cash basis for GST. I used write a chq but no tax code.... allocated it to an "item" in expenses for P&L. If i put to accounts payable it will disappear from P&L won't it?
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Hi Lyndel
You need to have a Bill entered for it & apply the pre-payment (Credit) to it, then it will pick up the applicable pre-payment amount of GST & the net pre-payment amount will be on the P&L 😁
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