Recording past income tax amounts and PAYG-I
Hi, My employer is a sole trader and has only recently lodged his tax returns for the years from 2019 onwards, which has created amounts owing to the ATO which he has now paid and has also now b...
Forum Discussion
Has a Tax Accountant prepared Financial Reports (which agree to MYOB)?
A Sole Trader would, normally, nor have a Provision for Tax Account.
Payments of Income Tax would be posted to Owners Drawings.
Payments of quarterly PAYG - I would be posted to a Current Asset called PAYG - I.
The PAYG - I for the previous FY is transferred to Owners Drawings on issuance of the Assessment.
There is a similar recent post on the MYOB Community (to which I posted).
Duncan
Thanks Duncan,
I've not received anything from the accountant and my employer deals directly with them. I don't believe they have been given acess to the MYOB file. What specifically should I ask for from them? My apologies, I'm relatively new to this.
I've allocated the payments of the past tax payable as owners drawings. Do I need to get copies of the assessments or anything like that to record on MYOB?
We have to report our BAS monthly for the PAYG-W, but the PAYG-I is only paid quarterly still. There is a seperate bank account that I transfer funds to each payroll to cover these costs, including a portion for the PAYG-I, and so I just match the bank transfers on the bank feeds.
My understanding of what you have said is that I should create a journal entry for the PAYG-I portion so that it goes into that asset account each quarter. Then at the end of the financial year when the Income Tax has been processed, another journal is created to move those balances to the Owner's drawings, is that correct?
If I am to create a journal entry for the PAYG-I each quarter, would it be like this?
Cr - Bank account payment was deducted from
Dr - PAYG-I asset account
I'm confused because they are both asset accounts, so one wouldn't this just provide a negative amount for PAYG-I account?
