Read the forums for the last hour and still struggling to get this right.
The business has no employees but as per Australian BAS needs to pay a quarterly BAS that includes 3 figures that calculate to a single refund or payment.
GST owed on sales
GST claimed on expenses
PAYG (3 monthly Tax installment not Employee PAYG)
The single payment or refund appears as transaction in the cash account. How do I attribute this payment or refund?
At the end of any quarter the nett of the GST could be a payment or a refund, the PAYG Tax Instalment will always be a payment. Therefore the Manager Tax Payable account balance should be the nett of the GST and equal the GST value on the BAS. The PAYG Tax Instalment component on the BAS is in effort an invoice from the ATO charging you an amount as a contribution towards your next annual tax return assessment.
So the processing of any transaction in the cash account needs to be split between these two - GST and PAYG. The GST component to the Tax Payable account and the PAYG component to “Drawings” - this account depends on your BS Equity section structure.
It goes to Drawings as you are withdrawing funds from the business to pay for a personal/private expense - PAYG is not a business deduction/expense…
Thanks for the clarification. I would prefer Bank Transfer Clearing as the account name as its more self explanatory and this would only be used for online banking transfers. If you happen to use cheques for the transfer then you need to use Spend Money and Receive Money.
Ok, so the PAYG is the tax payable on the earnings of the superfund. Therefore in the BS - Equity section you would have accounts for Retained Earnings and Taxation on Earnings. The nett of these two would be re-distributed annually to the Liability Contributors accounts.
The PAYG amount on the BAS would be a payment posted to the Taxation on Earnings account.
As the income would be primarily be GST free - interest, dividends, rent (excluding commercial rent) there would be very little GST to pay, but service charges (property management/brokerage) could generate GST refunds.
If the GST related income (not total income - including interest/dividends) is below the GST threshold then you could consider not being GST registered, but consult your advisors on that point.
The PAYG within the sole trader business BAS is for a tax instalment against your projected personal earnings and as such is not a business expense. Therefore any payment would be allocated to the BS - Equity - Drawings account as you would be withdrawing funds for personal use.
If you are GST registered, then the GST will flow naturally from the Sales/Purchase Invoicing to the Tax Payable account.
I meant for a non-sole trader pty ltd business. Though the sole trader info would have been my next question.
The business has no employees but as per Australian BAS needs to pay a
quarterly BAS that includes 3 figures that calculate to a single refund
or payment.
GST owed on salesGST claimed on expenses PAYG (3 monthly Tax installment not Employee PAYG)