In our business clients often pay only part of an invoice with the remainder (maybe) being paid several months in the future, and often not at all.
GST is being calculate on the full amount even through we haven’t actually received the full amount.
Example with easy numbers.
We invoice a client for $9,900
Client pays $5,000
System calculates GST owing as $900, which would be correct if we received the entire amount (which we will never get in this case).
So, to write off the debt I create a journal entry for the balance but this has no affect on the GST amount we have to pay which remains as $900 when it should really be ~454.54 now.
Not certain where my understanding is breaking down. Appreciate any advice.