Announcements
Looking for information on the JobKeeper extension? Watch the video in our latest news article.

ATO Community

Can I change my business accounting from accrual to cash for tax purposes?

Highlighted

Master

Views 509

Replies 1

Our initial accountant set us up with accrual system for paying tax. He made so many mistakes in our books we had to get rid of him.

 

This year we have $40 000 of debtors outstanding. Due to COVID we don't know if we will ever be paid and which of that we will have to write off

 

Is there anyway to switch from paying tax on an accrual basis to a cash basis (so we only pay tax on money actually received)?

1 ACCEPTED SOLUTION

Accepted Solutions
Highlighted

Most helpful response

Master

Replies 0

Hi @KatieAcacia

 

If in choosing an accounting method for GST  and you are eligible to change accounting  methods, you can change from non-cash to cash but you will need to contact us

 

Generally if you call us and we are able to do the change because you are eligible, this will take effect from the beginning of the next reporting period from time of the phone call.

 

The means that in the first tax period you use the non-cash method you need to:

  • report the GST on any sales for which you have issued invoices  before the date of the change but had not yet received payment
  • account for the balance of GST on any sales that had been partly accounted for before the change.

You are also eligible to claim any unclaimed GST credits that you hold a tax invoice for in the first tax period.

 

Hope this helps - eligibility is detailed under choosing an accounting method for GST.

.

1 REPLY 1
Highlighted

Most helpful response

Master

Replies 0

Hi @KatieAcacia

 

If in choosing an accounting method for GST  and you are eligible to change accounting  methods, you can change from non-cash to cash but you will need to contact us

 

Generally if you call us and we are able to do the change because you are eligible, this will take effect from the beginning of the next reporting period from time of the phone call.

 

The means that in the first tax period you use the non-cash method you need to:

  • report the GST on any sales for which you have issued invoices  before the date of the change but had not yet received payment
  • account for the balance of GST on any sales that had been partly accounted for before the change.

You are also eligible to claim any unclaimed GST credits that you hold a tax invoice for in the first tax period.

 

Hope this helps - eligibility is detailed under choosing an accounting method for GST.

.