Bad debts in the Business Activity Statement based on cash basis

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RubyVu
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Bad debts in the Business Activity Statement based on cash basis

Hi everyone,

 

I have a question regarding bad debts in the business activity statement. As we use the cash basis to report GST, the GST in bad debts are still included in the GST expense. Therefore, there are huge errors regarding GST purchases.

 

I have checked and found that when we choose the cash basis, GST will only be calculated once the invoice is paid. However, since the clients did not make a payment, the GST for bad debts should not be included.

 

Much appreciated for your supports.

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MYOB Moderator Steven_M
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Re: Bad debts in the Business Activity Statement based on cash basis

Hi @RubyVu

 

When you are on a cash basis the amounts involved in that transaction will be reflected for GST reporting when payment is made.  

 

As you have rightly pointed out, the allocation of a bad debt customer return doesn't indicate that money has changed hands. In terms of MYOB Essentials, what happens is that the original invoice value will be reported as Sales and this is then offset by the allocation of that customer return with a value in the Purchase section.

 

For example: below is the GST allocations for a bad debt allocation for $1000 on a cash basis:

 

Attachment2.PNG

 

 

Kind regards,
Steven

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RubyVu
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Re: Bad debts in the Business Activity Statement based on cash basis

Hi Steven,

 

Thank you for your support.

 

I understand now.

 

Wish you all the best.

 

Ruby

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