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Re: Change accounting method from Cash to Accrual

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Newbie

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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?

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Devotee

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If you account for your assessable income on an accruals basis, you include all income earned for work done during the income year. This is even if you hadn't received payment by the end of the income year. You don't need to advise them of what method you use but they are different to the GST cash vs accrual methods.


More info here https://www.ato.gov.au/Business/Income-and-deductions-for-business/Assessable-income/Accounting-meth....
1 REPLY 1
Highlighted

Best answer

Devotee

Replies 0

If you account for your assessable income on an accruals basis, you include all income earned for work done during the income year. This is even if you hadn't received payment by the end of the income year. You don't need to advise them of what method you use but they are different to the GST cash vs accrual methods.


More info here https://www.ato.gov.au/Business/Income-and-deductions-for-business/Assessable-income/Accounting-meth....