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Coco8836(Initiate)Initiate
14 Dec 2023

Hello there,


When our client first registered their business, they opted for Accrual Basis for their accounting reporting which also leads to Accrual GST reporting.


Now I wish to know:

  1. how do I change my client's accounting method from Accrual to Cash basis under ATO & in their business registration?
  2. What are the rules of changing the accounting method once business is registered from ATO?
  3. What are the tax implication of doing so?


To support my client effectively, I would appreciate it if you could direct me to ATO rulings or relevant resources or publications on the ATO portal that detail the guidelines and regulations pertaining to changing accounting basis from accrual to cash.


Thank you for your time and assistance in providing clarity on this matter. I look forward to your prompt response.

7,881 views
3 replies
7,881 views
3 replies

Most helpful response

Most helpful reply

DanielleATO(Community Support)Community Support
15 Dec 2023

Hi @Prissy8836,


Sure, I will answer your questions in the order you have asked them 😊


To have the accounting method updated you would need to speak to us to have it changed.


With your second question you first need to double check that the client is eligible to change their accounting method. If they are not eligible to have it changed, they will need to continue reporting on an accrual basis.


If they are eligible to have it changed, they would report on an accrual basis until the date the change is effective. Then start reporting on the cash basis.


We have a great page on how to change accounting methods that you may find helpful.

All replies

Most helpful reply

DanielleATO(Community Support)Community Support
15 Dec 2023

Hi @Prissy8836,


Sure, I will answer your questions in the order you have asked them 😊


To have the accounting method updated you would need to speak to us to have it changed.


With your second question you first need to double check that the client is eligible to change their accounting method. If they are not eligible to have it changed, they will need to continue reporting on an accrual basis.


If they are eligible to have it changed, they would report on an accrual basis until the date the change is effective. Then start reporting on the cash basis.


We have a great page on how to change accounting methods that you may find helpful.

Coco8836(Initiate)Initiate
18 Dec 2023

Dear @DanielleATO,


I appreciate your response. How do I check whether our client is eligible to change their accounting method? Could you please provide me any sources from ATO regarding this eligibility for a business to change their accounting method? Thank you.

ATO Certified Response
AnitaATO(Community Support)Community Support
ATO Certified Response19 Dec 2023

Hey @Coco8836,


All the information you need about choosing an accounting method is available on our website.


Non-cash is generally used for larger business but it's also a method that smaller business can choose if it works best for them.


To account for GST on a cash basis your business will need to have aggregated turnover of less than $10million.


Depending on what method your client is currently using as to if they can change it. If their aggregated turnover is below $10 million, then they have the option to choose either method. If its above $10 million, then they will need to stay with the non-cash method.

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What are the procedures & rules in changing the Accounting method from Accrual to Cash basis? | ATO Community