5.1.2 Accounting for GST at Payment Time (Cash basis registration)

It may be useful for Trustees of funds registered for GST on a cash basis to understand the correct procedure for accounting for GST when paying Liabilities.

You should not allocate the GST when recording the Liability if your fund operates on a cash basis for GST.

When you pay the liabilities, you should create a Journal to DEBIT the total amount due and payable to the Accounts Payable account to which you credited the invoice.

The corresponding journal will credit the Bank or Cash account from which the payment was made.

You will then add additional lines to the Journal entry to CREDIT the expense account(s) to which the expense was originally allocated and DEBIT Account 2-1000 GST paid.

The invoice for ABC Accounting that was entered above as:

Liabilities_Journal Entry_Split expenses

Would require the following journal entry when paid:

Liaibilities_Entry of payment if registered for GST on cash basis

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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