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Re: Accrued revenue GST treatment

Newbie

Views 94

Replies 3

we sold aome HW and will receive revenue over 3 years, how gst will be applicable on this sale and we also need to recognise revenue, so the revenue will be recognise when the product delivery happened and which period gst need to apply?

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 2

Hi @Emran,

 

It will depend on which accounting method you use to report your GST.

 

If you use the cash method, you'd report the payment in the period you received money.

 

When using the non-cash or accruals method, when the invoice was issued or part payment is received. 

 

We have some fantastic information on our website about accounting methods.

3 REPLIES 3

Most helpful response

ATO Community Support

Replies 2

Hi @Emran,

 

It will depend on which accounting method you use to report your GST.

 

If you use the cash method, you'd report the payment in the period you received money.

 

When using the non-cash or accruals method, when the invoice was issued or part payment is received. 

 

We have some fantastic information on our website about accounting methods.

Newbie

Replies 0

Thanks for the response, Surely we are on accrual base. And sorry My questions wasn't clear may be - 

  1. When we deliver the product - inventory also need to reduce, so does the revenue need to recognise on day1. so should we do accrual revenue to recognise when its delivered and invoice monthly as we receive the payment OR we have to invoice on Day 1 and reflect the GST on day 1 too? 

ATO Community Support

Replies 0

Hi @Emran

 

Your trading stock (inventory) will change as it actually changes. No accounting method consideration required for that part.

 

You account for the payment depending on whatever accounting method you are on, as @CaroATO advised. If you're not sure what accounting method your business is on, you can check by contacting us and asking. How you invoice for the payments is up to you - you can either invoice each monthly payment, or payment in full in instalments.

 

If you invoice on day 1 for the full payment and are on the accruals method, you'll report the full GST on that invoice date.

 

If you invoice monthly for the instalments and are on the accruals method, you'll report the GST on each invoice.

 

If you're on the cash method, you'll report the GST as you receive payments, no matter the invoice dates.

 

You can read about valuing trading stock and find how to contact us on our website.