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Do I claim income on payment date or invoice date?

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Newbie

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As a sole trader, when I am doing my tax return for the year (after having done my BAS throughout) do I claim for the income that goes into my bank account for the financial year period, or do I claim the income from the date I invoiced? I noticed my 'sales' for BAS reasons is worked out by my software system on invoice date, so if I use the bank account method they will not correlate? I am unsure so would love clarification - thank you!

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ATO Certified Response

Community Manager

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Hi @Flea,

 

Welcome to our Community! If you're running a business, you usually need to include all your gross earnings (or proceeds from running your business) in the income section of your tax return. There are a number of other payments you may also need to include.

 

What you include in your return may also depend on the method of accounting you are using. There are two methods of accounting: cash basis and accrual basis. When using the cash basis you would report income when it comes into your bank account; but if you were using the accrual basis then income would be reported when the invoice was generated. You will need to decide what method of accounting you wish to use.

 

Hope this helps!

 

Thanks,

Nate

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Newbie

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I discovered the answer - you do it from your bank account. Thanks

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Most helpful response

ATO Certified Response

Community Manager

Replies 0

Hi @Flea,

 

Welcome to our Community! If you're running a business, you usually need to include all your gross earnings (or proceeds from running your business) in the income section of your tax return. There are a number of other payments you may also need to include.

 

What you include in your return may also depend on the method of accounting you are using. There are two methods of accounting: cash basis and accrual basis. When using the cash basis you would report income when it comes into your bank account; but if you were using the accrual basis then income would be reported when the invoice was generated. You will need to decide what method of accounting you wish to use.

 

Hope this helps!

 

Thanks,

Nate