Checking GST returns

 

Let's start by assuming you know the basics of how to do a GST return. If not, you should be talking to an advisor who will teach you. But once you've done the calculations for a GST return, we then need to check it is correct. Most people don't do this - they leave it until their accountant comes to them (usually some way through the next year) and says there is a problem. By doing this simple check each time you prepare a return, you avoid this, saving you and your accountant much strife.

 

First you run a balance sheet for the date the GST return runs to. If your GST is on an accrual / invoice basis, you simply compare the GST balance (there could be multiple GST accounts to be totalled) to the return you've calculated. In an ideal world, they match and you can give yourself a pat on the back and relax.

 

In practice most people do GST returns on a payments / cash basis. In that case your next course of action is determined by what system you use. If you can switch your balance sheet report to a cash basis, simply, then do that and check the same figures.

 

If not you have to adjust for the GST on debtors and creditors. This is not quite as simple as taking the figures and multiplying by 3 / 23. Your debtors may include zero rated sales (exports). Your creditors may include imports and exempt items. But most systems have a report that will show the amount of GST on these items. However you do it, you need to get the GST on debtors and creditors.

 

Once you have the figures, you start with the total GST from the balance sheet. If it is a refund, then the sign is negative. You deduct from that the GST on the debtors, and you add to that the GST on the creditors. The resulting total is your GST on a cash basis, which you can then check to your GST return. Again if it's the same, pat yourself on the back and relax.

 

Of course if you've never done this before I can almost guarantee the two figures won't be the same. Now there are so many reasons this may not be the same we can't go through them all. But it helps to understand why this should balance and then work from there.

 

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Contact us

Email results@businessacademy.nz

 

Skype PhilANZ

 

Phone 04 920 0911

 

P.O. Box 30-545, Lower Hutt 5040

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