How do I enter a refund from an insurance company please in Reckon Account accounting Small Business?

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  • Updated 3 years ago
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Chris

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Posted 3 years ago

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Leanne

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Hi Chris,

Is this a cash refund you have received?

Cheers
Leanne
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Chris

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The company sent a cheque
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Kevin Russell, Accredited Partner

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Leanne it doesnt really matter does it? The accounting treatment is precisely the same
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Leanne

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Hi Kevin,  if the refund is for an over payment of the premium I would post to the expense account to reflect the true cost of premiums paid.  If the refund is from an insurance claim then I would do as you suggested with the sales receipt.
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Kevin Russell, Accredited Partner

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Create an sales service item called insurance recoveries. Attach it to an account called "insurance recoveries" (type is OTHER INCOME) you need to make it GST inclusive. Create a sales receipt and post the income received to the bank account. Easy peasy lemon squeezy
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Chris

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Thanks Kevin. Would this have the same EOFY result as simply entering the amount as an income received from the Insurance company?
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Kevin Russell, Accredited Partner

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Chris thats precisely the effect it would have. I call it "other income" because it isnt as a result of trading activities
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Adrian

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I don't think the insurance recovery should have any tax code on it.

When you complete your insurance you tell the insurance company if you are claiming GST on the policy. The funds you receive for the insurance company excludes any GST.

So check what you have told the insurance company, if the funds you receive exclude GST. The Statements I have seen from insurance companies say that there is no GST.

https://www.ato.gov.au/Business/GST/When-to-charge-GST-(and-when-not-to)/Insurance-settlements/


Adrian
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Kevin Russell, Accredited Partner

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Yes and so it depends Adrian. Probably a good idea to check
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DebonAir

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correct about the GST not being included, however I would always use FRE  when reporting income, it keeps the tax reporting easier to manage.
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Chris

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Thank you for your input everyone. I appreciate your time.
The refund is for an insurance policy that anticipates the next year's turnover. If turnover is less than what was paid for, the insurance company will issue a refund. Because the refund reflects a proportion of the total invoice, I would say that it should include the gst.
Yes it should include GST agree . LIKE wise when you pay insurance you have GST credit .but this refund shold be treated as Gross income I think what Kevin mentioned not netted against expense .