Alternate Australian GST setup

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The following GST scheme is used by MYOB BussinessBasics.

Since GST is money you owe the government (or visa versa) you create an account called:

  • Liabilities:GST

Then, to make your balance sheet more informative, you create two sub accounts:

  • Liabilities:GST:Collected
  • Liabilities:GST:Paid

Whenever you receive income you record the GST component in Liabilities:GST:Collected and whenever you make a purchase you record the GST component in Liabilities:GST:Paid.

At the end of each accounting period if you owe the government money then you record the amount you paid it in Liabilities:GST:Paid. Or if the government owes you money then the amount you receive should be recorded in Liabilities:GST:Collected.

This simple scheme can easily be modified to be the same as the 3-account system. In this scheme Liabilities:GST:Paid is exactly the same as in the 3-account system, but Liabilities:GST:Collected is given the rather confusing name of Liabilities:GST:Payable. To move to the 3-account system all you need to do is create a new account called:

  • Liabilities:GST:BAS

This is where all of the GST money you pay the government is recorded. In the 3-account system this account is called Liabilities:GST:Payments.

Another variation of the 3-account setup is to have the BAS payments (or refunds) as separate sub-accounts, rather then entering the transactions directly in the Collected and Paid accounts.

  • Liabilities
    • GST
      • Sales
        • Collected (gst received from sales)
        • BAS (net gst payments to ATO)
      • Purchases
        • Paid (gst paid on purchases)
        • BAS (net gst refunds from ATO)

You are free to change the names to be more explicit if it makes things easier for you :)

  • Liabilities
    • GST
      • Sales
        • GST Received (gst received from sales)
        • BAS Payments (net gst payments to ATO)
      • Purchases
        • GST Paid (gst paid on purchases)
        • BAS Refunds (net gst refunds from ATO)

Gnucash 2.7 or later

The following 3-account structure can be used, and will greatly ease the periodic reporting:

  • GST (placeholder account) (type ASSET/LIABILITY)
    • GST:Collected (from Sales) (type LIABILITY)
    • GST:Paid (from Expenses) (type ASSET)
    • GST:BAS (from periodic BAS) (type ASSET/LIABILITY)

As above, GST collected on Sales and paid on Purchases will be recorded with a split to the above.

Periodically (usually quarterly) the ATO will require reporting of all GSTs collected and paid from business expenses. This can be obtained by running the report Income & GST Statement, which is useful to add GSTs paid and collected, for ATO reporting. This report will obtain source transactions from your business expenses & sales, and will obtain GST splits from the Collected & Paid accounts selected in the Accounts tab.

The GST wholly received/paid to the government can be recorded into GST:BAS.

"Income & GST Statement" sample report
Date Description Total Sales Net Sales GST Sales Total Purch Net Purch GST Purch
03/08/17 Agency $4000 $4000 $1760 $1600 $160
03/09/17 Agency $5050 $5000 $50 $2200 $2000 $200
06/09/17 Marketing $220 $200 $20
Totals $9050 $9000 $50 $4180 $3800 $380

GST receivable for this period = $380 - $50 = $330 (to be claimed back from ATO)

Remittance into my bank = $9050 - $4180 = $4870 (what I initially receive into bank)

Income after expenses, relevant to annual income tax = $9000 - $3800 = $5200