Re: [SL] Incorrect Tax Reports

[George O. <geo...@ya...>]

On Tuesday 29 May 2007, David J wrote:
> Hello list
> We continue to have significant bother with cash-basis tax
> reports.
> In Australia, the existing reports are incorrect because
> part-payments are ignored.
> See example at end.
> Dieter seems not yet convinced that these reports are wrong,
> so I'm interested to know of any other places in the world
> that applies cash-basis tax-reporting the same as we do.
> Hopefully then Dieter may be interested to reconsider the
> problem, and seek a better solution.
> I believe New Zealand is the same.  Can someone confirm ?
> Anywhere else ?
> Thanks
> David J
>
> PS.  If you use Cash Basis tax reporting in Australia, you
> have been warned !!
>
> Example.  Remember its cash basis tax reporting.
> On 15 February we invoiced a customer for $1,000 plus GST of
> $100, total $1,100.
> On 14 March the customer paid $550 towards the invoice. We
> applied the part payment correctly. At the end of March
> there is $550 still owing on the account.
> Under Australian GST rules, we collected GST of $50 from
> this customer during March, and we now owe that to the Tax
> Office.
> But SQL-L incorrectly reports the GST collected as zero,
> until the invoice has been paid in full !
> (If we report zero we could get into serious trouble with
> our Tax Office.)
> The remaining $550 was received in April, and the final $50
> of GST should be reported and paid to the Tax Office
> sometime later. But the SQL-L report for April, Cash Basis,
> now shows $100 of GST collected. The SQL-L report is again
> incorrect.
> Of course this issue applies to both AP and AR partly paid
> invoices.


The way SL handles cash accounting is correct.
This problem has been discussed many times on this list. I myself had lots of 
problems at the beginning, few years ago until I realized it was me who was 
causing all problems. 
Cash based accounting means that all the money coming in should be taxed at 
the time of payment and payment should be processed at the time of sale. It 
is that simple. That also means that if you are registered for cash based 
accounting YOU SHOULD NOT OFFER ACCOUNTS to your customers. If you do then it 
is your own risk that you are taking and as far as ATO is concerned it is not 
allowed.
To avoid problems with SL all invoices and full payments must be within 
selected tax period. That means if you want to report GST for the first 
quarter make sure that all invoices are open and closed with full payments 
within that period. You will not have any problems.
In Australia you can also choose to report GST anually which is what I do. 
That solves all the problems.


-- 
George
AUSTRALIA
http://www.okstudio.com.au