Recording company income tax liability

[jonesty]

Hi, my accountant recently completed my company tax return and advised me it was now safe to roll over the financial year, which I've done. However, I can see that the tax liability hasn't been recorded anywhere yet and when I attempt to create a General Journal entry for it (dated 30/6/2022), MYOB warns me about creating an entry for a previous financial year. Can somebody please advise me on how to proceed with this?

[CloverQ]

Hi @jonesty 

In the new Essentials/MYOB Business you can still enter transactions in the previous financial year if needed, provided that the dates are not locked. 

Typically a financial year should only be rolled over when everything's finalised, which is done via these End of period tasks.  If everything balanced out when you rolled over the financial year, please do double check if the tax liability is already recorded somewhere, maybe in a different transaction type.  I'd suggest verifying it with your accountant before entering transactions in the previous financial year.

[jonesty]

Hi @CloverQ,

Thanks for your reply. I spoke with my accountant today and he confirmed he forgot to record it. I've instead now created a general journal entry for 1/7 to debit Retained Earnings and credit Income Tax Payable, which I suppose has the same effect on the company's current position.

Out of curiousity, if I had recorded the liability against last FY (post rollover) as you said is possible, would the Retained Earnings have been re-calculated accordingly?

Cheers.

[CloverQ]

Hi @jonesty 

Apologies for the delayed response.

The Retained Earnings is affected by the Net earning/loss of the year, so if you record a journal posting to any of the Profit & Loss report accounts, the retained earnings will change then. 

Again, we do recommend confirming with your accountant before recording any adjustment journal entries.