Using liability account for ATO ICA: how/when to adjust the various tax accounts?

Hi JoeW 

Thanks for your post and the detailed information, it sounds like you are processing these transactions correctly. The Spend Money transaction at step 2 should be allocated to the PAYG liability account so would be 'payment' and reduce that liability account. The ICA account should show a credit for the PAYG Spend money transaction and a debit for the Receive Money cash flow boost transaction. Leaving a net balance of $9853, being the refund amount.

Personally I'd recommend using the Pay Liabilities instead of Spend Money to record payment of PAYG withholding amounts. You would need to change the Pay from Account to your ICA account, change the Liability type to Taxes and tick the transactions.

Generally speaking, the PAYG liability account won't be zeroed out because of the timing of activity statement payments. For example, the PAYG liability for September is $147 which you pay on the 15th October but you've processed two October payruns so the liability account will show the october balance as owing. I used to reconcile the PAYG liability account in the Reconcile Accounts window, it's a great way of making sure your payment amounts are correct and recorded correctly.

Another option for the Spend Money at step 8 is a Transfer Money transaction from the ICA account to the bank account. This will clear the ICA account and record the deposit in the bank account for reconciling.

Please let me know if you need further help with this.

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