Interest received from Inland Revenue on GST Refund

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MegC
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Interest received from Inland Revenue on GST Refund

I have received a GST refund from Inland Revenue, which includes interest over and above the return amount, for paying early.  My problem is not with the original GST entry but when I enter the journal entry to clear GST collected and GST paid accounts for the return.  I enter the GST collected amount, the GST Paid amount and then the GST Payments/Refunds amount (which is what I actually received).  I am obviously left with the small amount of interest paid by IRD which needs a Credit transaction to balance the entry. 

My best thought is to enter a Credit to GST Payments & Refunds and memo it Interest Paid by IRD.

Would welcome any suggestions on how others have dealt with this?

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Ultimate Partner Murray_McKenzie
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Re: Interest received from Inland Revenue on GST Refund

Hi Meg

 

Your interet should be credited to an income account - generally in the 8-xxxx, Other Income section, and specifically called Interest Received. If you put it to a GST account it will wrongly sit in the balance section when it is an income to the business.

 

Hope this helps

 

Murray McKenzie
B.Com
IRD Registered Tax Agent
Boots 'n All Ltd
MegC
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Re: Interest received from Inland Revenue on GST Refund

Thank you very much.  I have set up an 8-XXXX for Interest Received IRD.  I already have Interest Received accounts for the various bank accounts so this makes perfect sense.  Thanks again.

MegC
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Re: Interest received from Inland Revenue on GST Refund

Oh ... should I also have entered the interest received separately on my original entry when I recorded the payment from Inland Revenue?  

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