GST on overpayments

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  • Updated 1 year ago

Accounts Premier 2017 - Accrual accounting - gst cash basis

When customer overpays and balance is left as credit balance for later use no gst is accounted for on overpayment amount.

Company accountant is insisting gst should be accounted for at time of receipt of money (which of course Reckon doesn't do) anybody else have this issue/found a way to deal with it?

Help much appreciated

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Leigh-Anne

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Posted 1 year ago

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Neil Hodgson

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I think your accountant is wrong in this case.
The receipt of money as an overpayment is not for a taxable supply.
The total sum of the money received should sit against the debtor's account.
Once that money is applied to a sale then the GST is accounted for.
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Malcolm McMaster

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I also would question your accountants view on this. An over payment represents funds the entity is (basically) holding in trust & as such is fully refundable (potentially) to your debtor, or to be used in reducing a future debt. GST is accounted for when a taxable supply transaction occurs. Find a new accountant & your problems will be solved.
So your TAX AGENT/ Accountant has sent you an email on this?
call us if you wish to discuss , we are Tax Agents and Reckon partners for many years (19).
May be  you should re discuss with your external accountant again.
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Toni

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I agree, change Accountants :-) GST is payable/paid on taxable supply - an overpayment is not a taxable supply it is a liability to your business.
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Allan Hamblin

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GST is an ogre in the room. I agree with other comments, but how Reckon/QuickBooks handles it I don't know, e.g. deposited cheques without an invoice. I have/had discrepancies that I could not trace. QB does not provide for separation of BAS payments into GST and PAYG, and I think attempting to get around that has caused problems.