ATO Tax Refund

1

Having just done my 2019 tax return, I have received a refund from the ATO (a very rare experience).

However, from previous years, I had a larger tax liability and I have been paying that off monthly. This recent refund merely reduces that liability.

I can’t do a Receive Money as that will increase my Bank account balance. I can’t do a journal entry ( debit tax liability account…but credit what?).

I’ve coped quite well with Manager over the years and have become almost lazy in my understanding as it is such a good system to use. But the entries for this are confusing me.
Can anyone guide me please?

2

Assuming you are a sole trader your income tax liability or refund should not be brought to account in Manager because it relates to you personally and the assessment is not solely based on the business operating result.

3

Thanks @tony, I maintain 2 ‘businesses’ in Manager. 1 is my company and the other is my ‘personal’ stuff.

Included in the Personal ‘business’ is, amongst others, my bank account, mortgages on investment properties, rent received and expenses on investment properties, personal expenses (just so I can show my wife how much she spends on beauty products), and also the tax liability which was there before I incorporated.
Would the other side of the journal entry therefore simply be to credit ‘Owner Equity’? The tax liability, and the refund thereof, are entirely of a personal nature. Thanks

4

Yes that is correct. Debit the liability account and credit your capital account.

5

Why not refund it back to ATO for your next taxation comming. It would be better.

6

Why not to made your wife personal account. Where at fund come from, where the dollar hose for.

7

Great - thanks @tony

8

Because the refund from the ATO reduces my liability to the ATO - that is the rule! Also, I cannot make the refund to my wife’s account as money comes to MY account with the ATO - not my wife’s.