Need Some Information on GST

chinawa111 on 13/01/2020 - 17:05

Hi!

I had a debate with someone that the owner of a company doesn't pass on GST to the government if they haven't received the GST from the client.

Scenario: A invoice got issued for $100, gst is additional $10. Total is $110 payable by the client. I have entered this invoice in my accounts and books. Upon checking I didn't receive the $110 by the client. However since i have written in my invoices and records (accounts) that $10 GST is payable since i charged it (didn't recive it from client though) do i still pay it to the ATO?

Thanks :)

(my scenario isn't real just simplified.)

Financial GST

Comments

  • TheMindsetTraveller on 13/01/2020 - 17:15

    Let's put it another way; the person in fact did pay the $10 GST, it's just that only paid you $90 for the goods/services that was provided. Now is the GST payable in that scenario?

    • chinawa111 on 13/01/2020 - 17:42

      Yes, but my point is that if I never recived the GST from my client am i still expected to pay it to ATO?

  • pok on 13/01/2020 - 17:17
    +4

    Look up cash vs accruals

    • chinawa111 on 13/01/2020 - 17:42

      Thanks! I will look into it.

  • JimmyF on 13/01/2020 - 17:21
    +2

    I had a debate with someone that the owner of a company doesn't pass on GST to the government if they haven't received the GST from the client.

    Depends on type of books they are running, cash vs accruals. Look them up. You both can be right ;)

    • chinawa111 on 13/01/2020 - 17:41

      Oh right, my point was that if i never received the GST from the client how can i be expected to pay it out of my pocket…

      I will have a look into it.

      • JimmyF on 13/01/2020 - 18:04
        +1

        my point was that if i never received the GST from the client how can i be expected to pay it out of my pocket…

        Again it will depend on the accounting method used for your 'books' in question, one of the two ways you have to pay GST on the recording of the 'sale' even if you haven't received the money yet, the other you don't. Hence why you both can be right at the same time ;)

        Here is some light reading for you

        https://www.ato.gov.au/Business/GST/Accounting-for-GST-in-yo…

        • chinawa111 on 13/01/2020 - 18:20

          Awesome! Thanks. I found my answer on that page.

          You account for the GST payable on the sales you make in the reporting period in which you receive payment for them .

          • JimmyF on 13/01/2020 - 19:21
            +1

            @chinawa111: errr not that simple, that quote is under the CASH section and only applies if using cash setup for your books, if you kept reading, down, you'll find more info under the accruals sections that says

            You account for the GST payable on the sales you make in the reporting period in which you issue a tax invoice or receive full or part payment, whichever happens first.

            So its not clear cut as that quote you said, again it depends if you have 'cash' books or using 'accrual' books.

            Under accrual, you pay GST if you have issued an invoice, even if you haven't received payment. Under cash, you on'y pay GST once you receive payment.

            • chinawa111 on 14/01/2020 - 23:48

              @JimmyF: Oh righto, your last paragraph is the answer then. Very easy to understand.

              Thanks :)

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