Company Income tax and PAYG instalment

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  • Updated 10 months ago
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What double entry should I enter ?
for example 
Company net profit $100 and need to pay Income tax (30%) $30
we already paid PAYG income tax instalment $40

at 30 June
should I record like this

Dr Income Tax Expenses  $30
Cr Income Tax Payable $30

Dr Income tax Payable $30
Cr PAYG income Tax instalment $30

is it ok ? or any other suggestion ?

thanks
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Mic

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  • confused

Posted 10 months ago

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Michael Corrigan

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The first journal entry at the end of the year should be as displayed by you. However, I would not do the other journal entry until the ATO refunds the money to you. When the ATO does your refund, then you could do the following journal entry.

DR Income Tax Expense $30
DR Bank $10
CR PAYG Income Tax installment $40
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Mic

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the Income tax payable  $30 will included in the Company Tax Return as a Current Liabilities ? ?
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Michael Corrigan

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Income tax payable would be a current liability.. The PAYG installment would be a current asset. Both would be reflected as such on the Company Tax Return
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Mic

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Thank you
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Mic

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How about
if the company has prior loss carry forward, for example $10 , 
the transaction will be like this ?????

Net profit $100
Less prior year loss  $10
Tax (30%) $ 27

Dr Income Tax Expenses  $27
Cr Income Tax Payable $27


thanks
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Michael Corrigan

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Correct
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Mic

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Thanks :)