Hello,
I am seeking guidance on the correct accounting treatment for GST on post-tax deductions related to a novated lease arrangement.
Our company has entered into a novated lease agreement with a leasing company, and we are making salary sacrifice deductions from an employee's salary. The deductions are divided into pre-tax and post-tax components. The documentation from the leasing company specifies that there is a GST component on the post-tax contribution.
Here are the details of the salary deductions:
- Pre-Tax Salary Sacrifice (Excl. GST): $323.79 (fortnightly)
- Post-Tax Contribution (Excl. GST): $217.51 (fortnightly)
- GST on Post-Tax Contribution: $21.75 (fortnightly)
- Total Salary Sacrifice: $563.05 (fortnightly)
I understand that the pre-tax salary sacrifice is not subject to GST. However, I need clarification on how to book the GST on the post-tax contribution. Specifically, should the GST on the post-tax deduction be recorded as GST on sales, or is there another correct way to account for this?
Any guidance on the proper accounting treatment for these transactions would be greatly appreciated.
Thank you.
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