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February
February
I am trying to understand how a client is working their books.
So they issue out an invoice to a client for future work and receive a deposit against this invoice. He allocates the entire invoice as customer deposits liability. And uses the tax code as GST. When he receives monies he does a journal against the liability account and then credits income but uses the tax code NT.
i explained to him that he should have created a sales order and then converted it an invoice and offset payments against the invoice.
my understanding is that as soon as an invoice has been created, you have created a sale supply. So when reporting the GST on cash you would report the deposit as income and pay the GST and then pay the remainder GST when the remainder of the invoice has been paid.
Also when completing the tax return on accrual BASIS we must include the entire invoice as income regardless if only a deposit has been paid and the remaining balance of the invoice should be shown as a debtor.
customer deposit liability is only used when there is a sales order not an invoice correct?
February
February
Have a talk to a Tax Accountant.
GST is payable on a Taxable Supply.
Is a Deposit a Taxable Supply? - depends on the facts.
Have a read of the Arthur Murray Tax Case.
Your questions are complex and best answered by the Tax Accountant.
Duncan
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