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Re: Invoices received after GST cancelled

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Newbie

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I have changed from a sole trader to a Company from 1 July 2018. 

As a result my GST registration was cancelled. In July 2018 I received 3 separate payments for works completed with GST in June when still registered. 

 

These amounts are now showing as taxable payments reporting amounts in my tax return with GST. 

 

What do I need to do about the GST as my registration was cancelled when money was received as I report on a cash basis?

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Hi @Cutler2012,

 

Thanks for your question!

 

In addition to the information provided by  @Bruce4Tax, the payer is only required to report the invoices in the TPAR when they are paid. This means if you issued the invoice in June 2018 but it was not paid until Sept 2018, the payment will be reported in the 2019 financial year. This is outlined on the Taxable Payments Annual Reporting page here.

 

Ideally the GST cancellation date should have taken effect after those invoices were paid, but if you have accounted for the GST in the final BAS (June 18) and kept the appropriate records to show that your business had ceased, then I don't imagine it will cause you any difficulties.

 

I hope this helps, but please let me know if you have any other questions.

 

Thanks,

 

Rachael B.

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Devotee Registered Tax Practitioner

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I think that this is classed as an adjustment to your last BAS form, so you should include the GST in those invoices in the final BAS.

 

See  https://www.ato.gov.au/Business/GST/If-your-business-changes-or-ceases/Completing-your-last-GST-acti...

 

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Hi @Cutler2012,

 

Thanks for your question!

 

In addition to the information provided by  @Bruce4Tax, the payer is only required to report the invoices in the TPAR when they are paid. This means if you issued the invoice in June 2018 but it was not paid until Sept 2018, the payment will be reported in the 2019 financial year. This is outlined on the Taxable Payments Annual Reporting page here.

 

Ideally the GST cancellation date should have taken effect after those invoices were paid, but if you have accounted for the GST in the final BAS (June 18) and kept the appropriate records to show that your business had ceased, then I don't imagine it will cause you any difficulties.

 

I hope this helps, but please let me know if you have any other questions.

 

Thanks,

 

Rachael B.

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@RachaelB, it is difficult to cancel GST registration only after all payments of invoices have be received, because in the meantime the business has to continue to issue tax invoices, and would then be waiting on payment for those, so it would be an ongoing problem.  Is @Bruce4Tax  corrrect in saying that the outstanding invoices that include GST should be reported on the last BAS as an adjustment before they are paid, but in anticipation of them being paid after the GST registration is cancelled? Is that what this means: "If you operate on a cash basis, you will need to record all the sales and purchases that you still need to attribute from a previous tax period." 

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Hi @LJB,

Thanks so much for getting in touch!

Generally, there aren’t very many situations where you would have to continue issuing invoices if you were eligible to cancel your business registrations, so it’s usually just a matter of waiting for your final payments to be received (if accounting under the cash method) and cancelling your GST afterwards.

 

Though you may be able to account for your sales on your final BAS as mentioned by @Bruce4Tax, this may make things a bit messy from a taxation perspective, especially if the invoice was paid in a different financial year to when it was issued.  If the entity that has paid your invoice has accounted for it in a different tax period to you, this may make things difficult, as per the OP and the discrepancy with their TPAR reporting.

An example would be if the sole trading has ended in June but you receive payments in July - In this situation, you will need to account for these payments in your July to September quarter BAS. You would cancel your Sole Trading ABN and GST role from the 30/09/2019. If these payments didn’t come in until October you would need to lodge a Nil BAS for the July-September quarter and then lodge the figures in the October –December quarter. If that is then the last payment you would end your ABN/GST on the 31/12/2019.

 

Luke S

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Thanks Luke.  Here's the situation: Partnership has not met the compulsory GST threshold for a while and will cancel their GST registration as of 31 December. They do however have outstanding tax invoices that were issued GST inclusive prior to Jan 1.  Payment for these will be received in January or later. They will continue to operate the business and issue invoices with no GST. So it is not possible to postpone cancelling GST until all Tax invoices are paid as the the business continues to operate. The GST collected in January and beyond on these invoices needs to be forwarded to ATO somehow, but as GST Registration will be cancelled, no MARCH BAS will be available.  Customers should treat any GST credit as disclosed on the tax invoice they pay, or not claim a credit on an invoice that does not include GST. I wouldn't be accounting for income in a different period, but doing an adjustment to bring in GST collected on payments received in a future period.

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Hi @LJB,

 

To account for the GST inclusive invoices paid in January 2020 cancel GST from the first of January 2020.

 

This way a quarterly BAS will issue and the final invoices inclusive of GST will be reported in the correct quarter.

 

Hope this helps,

 

JasonT