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Company tax entry

georgieh

I just paid company tax for 2024, but it is set up in my file as an "Other Expense", with then obviously reduces my net profit for 2025.

What sort of account should company tax be so that it reflects NPAT for last year, and doesn't effect this year?

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DuncanS

@ChrisMc

Chris,

Accountants might use a Current Liability named Income Tax Payable.

I prefer to have a separate Income Tax Payable for each FY.

Duncan

ChrisMc

Hi Duncan
Going forward if you enter the paid to the ATO for GST to the GST collected 1A and difference to GST paid 1B, this will clear the GST liability.
However, you will need to clear the GST collected and paid to date by creating a general journal at June 30th to the clear the values and add GST values of your June BAS and
for example
If GST collected at June 30th is $15000 and GST paid is ($5000)

1st step, Create a general journal to clear
DR GST Collected $15000
CR GST paid $5000
CR other liability $10000

2nd step,
CR GST collected of value of 1A on the BAS
DR GST paid 1B
DR other liability different

Then when you pay the BAS in July, clear the above values

Thanks Chris

georgieh

Thanks @DuncanS. That was just what I needed.

Further to this, on my dashboard, MYOB is keeping a tally of GST collected and paid - way beyond anything I actually owe the tax office. This is because every time I enter my BAS, I enter the amount I am paying as an "Other Liability" called GST Collected, and the amount I am owed by the ATO as an "Other Liability" called GST Paid. So I just keep on increasing my liabilities with every payment. Clearly a mess.

If MYOB knows my GST collected and paid, how do I complete the entries in the BAS to actually update the liability as I make/receive ATO payments?

DuncanS

@georgieh @ChrisMc

The Journal for Income Tax Payable is

Dr Income Tax Expense FY24 Other Expense

Cr Income Tax Payable FY24 Current Liability Dated 30 June 2024

Payment is posted to Income Tax Payable

I do wish Accountants would use the Cloud and record their workings within the MYOB file.

Duncan

ChrisMc

recommend to seek advice from your accountant

georgieh

Thanks Chris. My accountant doesn't tend to do much within MYOB - just uses it to complete the formal financials and tax returns.

So if I were to do this myself, what would the entries be (and what about the dates, when the transactions occurs in the next financial year)?

ChrisMc

Another account to use is a liability named 'company tax liability or tax liability'
This is used by the accountant to enter the tax of 2024 for you to pay off the liability.