Company tax entry

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

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.

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)?

recommend to seek advice from your accountant 

Hi georgieh​ DuncanS​ ChrisMc​ 

Not many Accountants will do this, some will send you the entry they want done, but that is very rare.  That is why you need someone who is an exceptional Bookkeeper or like me a qualified Accountant but didn't want to do the extra study to be a CPA or CA.  Being a single mother was hard enough with working part time.

Their would be more than just the Income Tax to be entered in the end of year adjusting entries, there would also be depreciation, if employing staff they may also take out the superannuation expense not yet paid, some do some just do that via the income tax return adjustments.

There also may be a reduction or increase in some of the expenses.  All of this can be worked by comparing MYOB's P&L and BS to the financials that an Acccountant gives their client at end of year once the Tax return lodged.

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?

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

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

georgieh​ Julie_A_C​ ChrisMc​ 

Georgie,

The Journal for Income Tax Expense is dated 30 June of the FY.

I recommend that Business Owners 'read and understand' the Company Tax Return before signing.

The Company Tax Return has a Calculation Statement showing Taxable Income, Income Tax, PAYG - I and Income Tax Payable.

All of the above should agree with MYOB.

Duncan

georgieh​ ChrisMc​ Julie_A_C​ 

Georgie,

In preparing a BAS, the GST Report for the Q is reconciled to the GST Collected and GST Paid Accounts on the Balance Sheet.

At 30 June, I have a ledger called BAS April - June 20xx.

The GST Collected and GST Paid Ledgers will be nil if GST on a Non-Cash basis, the PAYG Withholding ledger will be nil.

The PAYG - I Ledger should agree with the Report from ATO Online.

At 30 June, I prepare a BAS Reconciliation listing the GST Collected/GST Paid, W1 And W2 and PAYG-I for the year.  These amounts are reconciled to MYOB before lodging STP Finalisation and BAS Q4.

Duncan