10.0 GST Overview Default GST Options Claim I.T.C Charge G.S.T.

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1 10.0 GST 10.1 Overview As you enter your day to day information, Payperwork calculates the amount of GST that you need to pay and the Input Tax Credits that you can claim and gives you a report that you can use to complete your BAS. For more information on setting up your GST Details please see page 41. For more information on GST Control Accounts please see page Default GST Options Default checks in Ledger Accounts To make the entry and processing of the GST component of transactions easier, you need to tell the program which general ledger accounts you would normally claim ITC on purchases and payments. You are also able to set these defaults for invoices and receipts. For example, if you are entering the wages payment, and you have selected the account Staff Wages the program will know that there is no GST component and will not calculate 1/11 th as Input Tax Credits. It would know this because there is no check added to the default checks which mean they can be over ridden at the time you are entering a transaction. You can also return to these accounts at any time and change the default. you have used the program under GST for a while you will develop a better understanding of what these defaults mean. *** If you are using one of Payperwork s standard chart of accounts, these defaults will already be set. Use the following information for creating new accounts or for changing the existing marks if necessary Claim I.T.C. This refers strictly to Purchases and Payments made to these accounts. To mark the accounts go to [Adjustments/Accounts/Name & Group]. Select each account in turn and enter the check. Claim I.T.C: Click to mark with x if you WOULD normally (by default), claim ITC on purchases and/or payments made to these accounts. Some obvious examples are Purchases, Stationery, Loose Tools, Postage, Hire of Equipment, advertising, M/V Expenses Charge G.S.T. This refers strictly to Invoices and Receipts made to these accounts. To mark the accounts go to [Adjustments/Accounts/Name & Group]. Charge G.S.T: Click to REMOVE the tick if you WOULD NOT normally (by default) pay GST on the value invoiced or received. There are only a few accounts that you would remove the check from. These are accounts that money is received into where no GST is involved. For example Bank accounts, Drawings, Credit cards, Interest Received. Page 268 of 301

2 GST Report: (Include in) There are some accounts in the general ledger that do not involve GST and are not to be included in the GST report figures. Examples are Drawings, Staff Wages, and Superannuation. These accounts are part of the PAYG tax system and not the GST system. Bank accounts and loans are not supplies as such and are therefore not included either Transactions GST Ledger Entries Below is a table that demonstrates the entries that are made automatically when transactions are entered into Payperwork. This chart is here for your information only and no action is required by you Cash Mode - Invoice Ledger Entries Trade debtors Sales Ac / Other Accounts less GST Pending As the GST does not become payable until you receive payment, the GST on an invoice is placed in the Pending when an invoice is updated. The above table does not include the Stock entries Accrual (non-cash) Mode - Invoice Ledger Entries Trade debtors Sales Ac / Other Accounts less GST As the GST becomes payable as soon as you enter the invoice. The GST on an invoice is placed in the as soon as the invoice is updated. The above table does not include the Stock entries. Page 269 of 301

3 Cash Mode Receipt Ledger Entries Trade Debtors of Customer Lines Other Accounts of account lines LESS the on account lines Total Value of receipt (from Customer Lines matched to Invoices) Pending (from Customer Lines matched to Invoices) The GST that was added to the customer invoices now becomes payable. When the receipt is updated, the GST component is transferred from Pending to Accrual (non-cash) Mode Receipts Ledger Entries Trade Debtors of Customer Lines Other Accounts of account lines LESS the on account lines Total Value of receipt Cash Mode - Adjustment Notes Trade debtors Sales Ac / Other Accounts less GST Pending Accrual (non-cash) Mode - Adjustment Notes Trade debtors Sales Ac / Other Accounts less GST Cash Mode - Purchase Ledger Entries Purchases Acc / Other Accounts less Input tax Credit Pending As you cannot claim the Input tax credits until you have entered the payment for the purchase, the ITC component is posted to the ITC Pending account until a payment is entered. If using inventory items, the item balance, stock on hand and stock adjustment accounts are updated with the ex GST values Accrual (non-cash) Mode - Purchase Ledger Entries Purchases Acc / Other Accounts less Input tax Credit Page 270 of 301

4 Cash mode - Payments of Supplier Lines Other Accounts of account lines LESS the Input Tax Credits on account lines Total Value of payment Input Tax Credit from Supplier Lines matched to Purchases) ITC Pending ITC (from Supplier Lines matched to Purchases) The ITC that was claimed on supplier purchases can now be claimed. When the payment is updated, the ITC component is transferred from the ITC Pending account to the ITC account Accrual (non-cash) Mode Payments of Supplier Lines Other Accounts of account lines LESS the Input Tax Credits on account lines Total Value of payment Cash Mode Returns Expense acc / Other Accounts less ITC ITC Pending Accrual (non-cash) Mode Returns Expense acc / Other Accounts less ITC ITC When you lock the GST report PPW will: Transfer the reported values of GST and ITC out of the and Input Tax Credit accounts into the GST Clearing account. At rollover, the balance of the GST payable and Input Tax Credits accounts will be transferred to the GST Clearing account The GST Report The GST Calculation Sheet Printing and checking the GST calculation sheet is covered on the following pages. Read these pages carefully before you proceed to finalise the GST report. Below are the steps you should follow to finalise each GST reporting period Bank reconciliation Whether you are reporting for GST on a Cash or Non-Cash (Accrual) basis, it is important that you complete the bank reconciliation in the program first. This is one of the major ways of verifying that the information you have entered is correct and complete. Without the bank reconciliation an outside party (such as an auditor) cannot be sure that your books are in order and up to date and therefore any GST returns cannot be accurate. Also once you have finalised and locked the GST report you cannot delete to change transactions. Although there are methods of entering these changes it is always easier if you enter the information correctly before you lock the report. Page 271 of 301

5 Print account summary Go to [Reports/Taxation/GST]. Select the relevant month or quarter to report on. (e.g.: July to September). Leave the box marked Account Summary checked and click on [Print] Check that correct accounts are listed on the Account Summary The GST Account Summary lists all the accounts that have transactions for the period that are checked in the Account Details as GST Report. Some examples of accounts that should NOT be on the GST report are Wages, Superannuation, Drawings, Hire Purchase Liability accounts and Bank Accounts. If there are any accounts on the report that are in Italics it means that you do not have GST Report checked in the account details but you do have transactions that involve GST either that you have charged out or are claiming as ITC Verifying The balance of the account and the Input Tax Credits account should be equal or within a couple of cents. Through [Enquiries/Accounts], compare the balance of the account (as at the month of the report) with the total GST on this report. Through [Enquiries/Accounts], compare the balance of the ITC account (as at the month of the report) with the total ITC on this report Reporting With the aid of the G Report that prints on the last page of the GST Summary report, fill in a copy of your GST report and BAS Statement. Check this with your accountant or tax adviser if you are not confident with the results Locking down the GST Report At the end of each reporting period and after you have produced and balanced your report, you will need to finalise the report and file the details. Up until this time (the return must be into the tax office by the 28 st day of the month following the end of your reporting period), you will be able to keep processing for the next reporting period as normal. You will also be able to make adjustments and changes to the transactions in the previous reporting period up until you have filed and locked in the report. Messages will remind you that you have not locked down the report from the first day of the month following the end of your reporting period. If you do not perform this step, your subsequent GST report(s) will include information from the previous reporting period as adjustments. You would then be doubling up the amount of GST that you pay. Once you have used the figures from the report to send to the Tax Office you must lock the report down. The Filing and Locking Down procedure will automatically: Print your Final GST reports that are labelled as such. Mark all the transactions that were reported on in the database. Transfer the reported values of GST and ITC out of the and Input Tax Credit accounts into the GST Clearing account. After the report is filed and locked down YOU WILL NOT BE ABLE TO change or alter any of the transactions that were included in the report. You will however be able to reprint a previous report. How to print the final GST report and lock it down ****BACKUP onto a separate disk prior to proceeding. Go back to the GST report and print the account summary again. This time lock down the report by clicking on [Yes] at the Do you wish to file this report as Final? prompt. The report will print out details of all the transactions that are included in the report as well as another account summary but will have the heading Final File this report with copies of your BAS and other paperwork relating to the same BAS. For more details on the effect of locking down the report see the following page. Page 272 of 301

6 Complete final GST report and BAS ensuring that these figures match those on your GST report that is headed Final. Already have a copy (maybe several copies) of the GST report where the figures match those you have used to complete your BAS? You can lock the report without printing it again. Preview the report: Do the values on the preview still match the report exactly? If yes, click on [Finish]. Do you wish to file this report as final? Click on [Yes]. Print this Final Report during lockdown? Click on [No]. You will be asked for a password which is theonusisonme. Account Journals Journals to accounts do not appear on the GST report and journals are not transferred to the GST clearing account when the GST report is locked down. Adjustments to GST are best handled using zero total value payments. Any account selected in a payment that has a positive entry is a debit and negative entries are a credit. (See section called How to enter Vehicle purchased on a Chattel Mortgage.) Customers Journals Adjustments to customer balances via journals are rarely necessary in PPW. It is recommended that any adjustments that need to be made to customer balances are made through the adjustment note and receipt section of the program. Journals are not included in the GST report and therefore if the journal has any GST implications, a manual adjustment would need to be made on the Business Activity Statement.. Inappropriate use of the customer journal facility will cause discrepancies or overstatements on the GST report. Supplier Journals Inappropriate use of the supplier journal facility will cause discrepancies or overstatements on the GST report. Journals are not included in the GST report and therefore if the journal has any GST implications, a manual adjustment would need to be made on the Business Activity Statement. It is recommended that any adjustments that need to be made to supplier balances be made through the Return and Payment section of the program Entering a Payment you make to the Tax Office The payment that you make to the Tax Office will cover more than just your GST obligations. It will also cover your PAYG and other taxes. When you enter the payment you will need to split the payment over the correct accounts. Your accountant may be able to help you with this. Note that the GST proportion is entered against the GST Clearing account only. The GST proportion of the payment goes to the GST Clearing Account. The PAYG Withholding on Salaries and Wages goes to the Liability account that you post the Tax to each time you enter a wages payment. The PAYG Installment value goes to an Asset account (Group A). Page 273 of 301

7 10.6 Changing GST Reporting basis from Accrual to Cash On 1 st July or immediately after you rollover into the New Year and before you enter any transactions you must go to Setup/GST details and change the setting from accrual to cash. You need to pay the GST on the outstanding customer s balances and claim the ITC on the outstanding supplier s balances. You should check with your accountant as to whether you should pay this with the April to June BAS or with the July to Sept BAS. How you handle the adjustments you need to make depends on the period that you will be paying these amounts. If paying outstanding GST with the July to September BAS Print the April to June GST report and submit your BAS as normal. After the rollover change In the new year (after you have changed to accrual) when you enter the receipts to the invoices and payments to the purchases that were entered on a cash basis in the previous year, the program will still calculate the GST and do the entries to the GST and ITC Pending accounts and put the values into and ITC accounts. Before you can verify the accounts with the GST report when you have completed each quarter, you will need to journal these values back again. To do this 10.7 GST on Deposits and Prepayments When you enter a deposit from a customer, Payperwork creates a zero value invoice. You enter the deposit value as an amount paid against that invoice. You are required to pay the GST on deposits paid because it is payable when you receive consideration for services etc. Cash Basis When you enter the deposit the GST on that deposit will be included on the GST report for the period that you received the deposit. When the job is done and you raise an invoice for the services that the deposit is paying (either in part of in full), this invoice will not be included in the GST report because this happens when you receive the money in. Therefore if you do not allocate the deposits to the invoices when they are raised you will not be in danger of paying the GST twice. However we do recommend allocating these as soon as you raise the invoice so that the deposit is no longer listed as outstanding and the invoice had the correct amount paid allocated to it.. Accruals Basis When you enter the deposit the GST on that deposit will be included on the GST report for the period that you received the deposit. When the job is done and you raise an invoice for the services that the deposit is paying (either in part of in full), this invoice will be included in the GST report as well. Therefore if you do not allocate the deposit to the invoice when it has been raised you will be paying the GST twice. Page 274 of 301