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I have started working for an SME which has always adopted a cash accounting for its bookkeeping. In order to provide an accurate income statement and financial position of the Company, I believe accrual accounting needs to be adopted. It is a consulting business and cost of goods sold consist of mainly labour costs. We will continue to report our GST on cash basis.
Is there an impact on the way we complete our ITR? Do we need to inform ATO the change made prior? Will there be a need to run a two seperate Income Statements, one for ourselves and one for ATO based on old cash basis?
Most helpful response
18 July 2020 08:30 PM - edited 18 July 2020 08:36 PM
Replies 0
Most helpful response
18 July 2020 08:30 PM - edited 18 July 2020 08:36 PM
Replies 0
There is some information here: https://www.ato.gov.au/Business/GST/Accounting-for-GST-in-your-business/Choosing-an-accounting-metho...
Looks like you just report using the accruals method, and be sure to include invoices from the last period using the cash method but paid in the first period using the accruals method:
In the first tax period after the change, you will need to account for sales or purchases that you have not previously accounted for or claimed.
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