BAS, G1 and Bad Debts

1

I have a new Sole Trader setup using Australian account structures. Invoices are created using Manager but all expenses are tracked using third-party software. I am setup as Cash, not Accrual.

This is the first BAS report I have to make.

I have a collection of invoices that I have written-off by journal entry, debiting a Bad Debt (setup as an Expense) account and crediting the invoice. However, the “income” from the bad debts shows up in G1…

As I didn’t receive any income, why are the amounts showing up in G1?

2

Are you even required to report G10 to ATO? These days, vast majority of businesses only report G1, G2, 1A and 1B.

So I wouldn’t even worry about the split between G10 and G11 because your figures that you report to ATO won’t change.

If you really want to see your amounts in G10, then you need to use tax code GST 10% (CAPEX)

3

Thanks, the BAS report from Manager is showing G10… anyway, sorry but I realised how to do it and have now changed the topic as I couldn’t see how to delete the original… now a G1 and Bad Debt problem :slight_smile:

4

You are probably using GST code on bad debt. Do not use GST code on bad debt expense account. The correct procedure is to credit sales invoice and debit bad debt without using any tax codes.

5

I am crediting accounts receivable (invoices) and debiting bad debts and no tax code is used in the journal but the invoices retain their GST codes.

6

Sorry, I meant to say your bad debt journal entry need to have GST 10% code on bad debt if original invoice had GST 10% tax code.

7

That did it, thanks!!!