There may be instances where there needs to be adjustments which relate to the current or previous net GST amount on the BAS.
System Difference: the amount of GST Paid Tax Credits in the system was reported as a different amount on the previous BAS due to, e.g. advice from Tax Accountant or a posting error. Below is a screen example of an adjustment to reduce the GST Input Tax Credits by $267.27on the next BAS. The Purchases amounts would need to be adjusted manually to achieve the 1/11th requirement.
The example shows the use of the ATOGST Supplier with the invoice coded to the GENLED Job; the suggested GST Adjustment Cost Centre and General Ledger Account. If you know the actual Job and Cost Centre that the adjustment relates to then the invoice should be coded accordingly.
Over and Under Claim Amounts: Another type of adjustment may be where a Paid Tax Credit was wrongly claimed on the original invoice transaction. Post an Invoice entry to the original Supplier with the original Job, Cost Centre and GL account with the GST and inclusive Invoice amounts as negatives and equal to the original invalid GST amount. Update the Invoice and go to Posting – Audit Trail (refer example below) and edit the Amount to zero but leave the GST amount.
If the adjustment is to relate to GST Collected then this would be handled via a Claim adjustment. In these cases the actual Job and Debtor is important. Once again manual adjustments will be required on the BAS to meet the 1/11th requirement on Sales and Purchases.
Roundings: the BAS amounts are reported in whole dollars. If the net tax payable or refundable in the Payment screen differs (typically cents only) from the reported whole dollars on the manual BAS then post an Invoice dated the Until date of the BAS. Code the invoice to the Supplier ATOGST (or the Taxation Office Supplier code appearing in the GST Details screen) and the Job GENLED (or the Job code in the GST Details screen) with the previously suggested Cost Centre and GL account, e.g. 4.9999 GST Adjustments. Include this invoice in the Payment to the ATO or when recording the refund.
The aim is to have the GST GL accounts balanced to nil at the end of the reporting period. There should be agreement between the ATOGST Creditor and any statements lodged to the ATO. GST amounts appearing on system generated reports (GST Report and BAS) should reflect in the ATOGST Creditor reports subject to any posted rounding adjustments.
Over-Refund Amount: In the event of an over-refund from the ATO the following suggestion may be appropriate:
| 1. | create a GL account (Liability) and Cost Centre with a description of say "ATO Overpayment Clearing" |
| 2. | post a Direct GL Receipt for the overpaid amount to the new GL account |
| 3. | post an Invoice to the ATOGST and new Cost Centre and GL account |
| 4. | pay the Invoice along with the next quarter's tax invoices for GST, PAYG, Instalments, etc. and advise the ATO why this amount is included. |
However, taxpayers may not rush to repay the overpayment until formally requested.
Journal entries: The system does not allow nor recognise GST amounts on Journal entries. The same effect as a Journal can be achieved by using Invoices and Claims if the system is running on the Accrual Basis.
Example: a Journal is required to record a debit to cost of $500 and a debit to GST Paid Tax Credits of $50 and a credit to a liability of $550. The same outcome is achieved by posting an Invoice with a GST Inclusive Amount of $550 with a GST amount of $50, to the required Cost Centre and General Ledger account. Then post the offsetting negative invoice (credit note) with a GST Exclusive Amount of $550 with no GST amount, to the required Cost Centre and GL account. Creditors control account is not affected because of the offsetting invoice values. It is suggested that a Supplier is created with a code of JOURNAL to perform these types of posting. Use the BAS codes in Comments where applicable, e.g. G10, etc.
ATO Publications:
Useful ATO publications available through www.taxreform.ato.gov.au and supplied to registered ABN entities are:
"The Building and Construction Industry & The New Tax System"
"How to determine the value of construction work-in-progress" GST Bulletin GSTB 1999/2 14/9/99
"Business Activity Statement Instructions" (spiral bound) NAT 3030-05.2000 ISBN 0 642 43330 5
"BAS Basics" NAT 3898-01.2001
Please note that Databuild clients should seek taxation advice from their Tax Accountant and not Databuild support staff.
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