GST repercussions on outstanding Invoices
Options
Lyn_10072495
Member Posts: 40 ✭
My understanding is that if using an Accrual method, the GST is brought into the quarterly equation even if the Invoice has not yet been paid. EG, Inv is dated 02/11/2019 but has not yet been paid for by the customer at 31/12/19. In our business, we need to deal with the replacement of warranty items. We send the customer a new item, Invoice it at full price with the notes that once the failed item has been returned to us, the Invoice will be cancelled. In the past, we've simply deleted the Invoice. But if I've brought that GST component into the quarterly BAS and then pay it (on the BAS to the ATO), by deleting the Invoice, I think I do my self an injustice. My question is, instead of deleting the Invoice, if I create an Adjustment notice, will that counteract the GST in our favour?
0
Comments
-
HI Lyn. You are correct. Under accrual accounting, GST is taken into account for all transactions at the date of creation. If you have paid the GST on any for one quarter and then simply cancelled the invoice in a subsequent quarter, you will effectively have paid GST on a transaction which does no longer exist. Your approach to issue an Adjustment Note, dated when the goods are returned and include GST in the transaction, it will counteract the initial transaction.
It is probably in your best interests to adopt the same approach for all similar transactions, so as to avoid confusion i.e. issue the invoice and then negate it by issuing an Adjustment Note, rather than say just deleting the invoice if the return happens to be in the same quarter.
John L G2 -
Thank you so much for explaining and confirming things clearly. I think its a great idea as you've suggested to deal with this approach across the board. Ill be implementing this immediately.1
Categories
- All Categories
- 6.4K Accounts Hosted
- 10 📢 Reckon Accounts Hosted - Announcements
- 5.9K Reckon Accounts (Desktop)
- 3 📢 Reckon Accounts Desktop - Announcements
- 1.3K Reckon Payroll 🚀
- 21 📢 Reckon Payroll - Announcements
- 21 Reckon Payroll Help Videos 🎥
- 21 Reckon Mate App
- 3K Reckon One
- 7 📢 Reckon One - Announcements
- 11 Reckon Invoices App
- 14 Reckon Insights
- 107 Reckon API
- 822 Payroll Premier
- 308 Point of Sale
- 1.9K Personal Plus and Home & Business
- 63 About Reckon Community