Income

6.4.1 Income: Other Income Receipts – Income Tax Refund

Generally, any income tax refund due to your Fund should be calculated as part of the End of Year procedure and entered automatically as a Tax Refund Due, debited to account 1-1090 Tax Refund Due.

If this is your first year recording in Mclowd, any tax refunds due should have been entered in Receivables during the Fund Setup process, allocated to 1-1090 Tax Refund Due.

Income_taxrefunddueatstart date

 

When your tax refund is received, check the Trial Balance to confirm the amount shown as owing to you.
Trial Balance showing income tax refund due

When the tax refund is received, it should be credited to 1-1090 and debited to the bank, via a journal entry.

Select Journal Entries from the Settings Menu.

Income_settingsmenu

Debit the Bank to which the Refund was credited with the exact amount of the refund.

Credit 1-1090 Tax Refund Due with the amount shown in your Trial Balance as the amount due. – usually the amount received.

Posting income tax refund due

In some situations, the tax refund received may differ slightly from the amount shown as due.

To resolve any such discrepancy, use Mclowd’s Journal Entry screen to:

  • Enter the actual amount received as a debit to the bank account to which it was credited
  • Enter the actual amount received as a credit to account 1-1090
  • Determine the discrepancy between the amount of refund shown in 1-1090 as claimed and the amount received.

o   If the amount received was greater than the amount claimed, credit the difference to 5-1190 Overs and Unders

Posting income tax refund with overs

o   If the amount received was less than the amount claimed, debit the difference to   5-1190 Overs and Unders

Income tax refund with unders

 

Check that total debits and credits are equal and ”Out of Balance” shows 0.00, then click ADD JOURNAL ENTRY to save.


NOTE:

If the discrepancy is significant, it may be necessary to investigate the cause in order to allocate the difference correctly, as it may be necessary to make corresponding adjustments to Member Accounts if the tax payable by a member in a previous year has been incorrectly assessed.  Lodge a support request if in doubt, or consult your accountant.


 


about the author:

Lorraine Cobcroft

With a background in accounting and financial management, followed by two decades writing software documentation, Lorraine joined the Mclowd team in mid-2016 and is enjoying working with a dynamic team to enhance an innovative product that has the potential to revolutionize the way Australians manage their retirement funding.
Lorraine is also an accomplished business writer, ghost-writer, novelist and short-story writer and poet.

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