GST - How to calculate / manage / track GST.

[Linas Vepstas]

Hi,

Could I convince one of you to summarize the conversation
below, and write it up on the wiki?  -- at

http://gnomesupport.org/wiki/index.php/GnuCashAccounting

--linas

On Wed, Jun 09, 2004 at 07:53:39AM -0700, Doctorcam was heard to remark:
> * Benjamin Carlyle (benjamincarlyle at optusnet.com.au) wrote:
> > On Wed, 2004-06-09 at 19:18, John Pettigrew wrote:
> > > In a previous message, Doctorcam <cam at ellisonpsychology.ca> wrote:
> > > > I know it looks odd.  The tree is:
> > > > Liabilities ->GST
> > > >    ->GST Paid
> > > >    ->GST Payable
> > > This is very similar to the way I handle Fixed assets:
> > > Assets
> > >    Fixed
> > >       Fixed Assets
> > >       Depreciation
> > 
> > This is a stock-standard accounting hierarchy which my textbook calls a
> > "Contra-" account. Depreciation is a contra-account to Fixed Assets,
> > which is to say that it negates a portion of that account's value.
> > 
> > As I said, this is kosher for depreciation since depreciation never
> > exceeds the value of Fixed Assets. I'm not 100% sure of GST example.
> > Although it obviously works in practice, as Derick has pointed out the
> > GST Paid is an asset and not a liability. It works fine as a
> > contra-account while its value is less than GST Payable (the usual case
> > for a business), but is a touch less kosher should the GST Paid account
> > value be greater than the GST Payable account value. In this case, the
> > GST Clearing parent account changes from a liability to an asset and the
> > government will pay your business back that money next tax period.
>  
> In practice, if it reversed, you would not be in business long. :-)
> 
> In Canada, where the GST is 7%, and (unlike Australia) added to the
> fee or price, you must charge for it if your revenues exceed $30,000 per
> annum.  For the most part, you cannot claim GST you have paid without
> being registered and charging your customers or clients.  
> 
> Any imbalance is likely to be temporary (and as I have recently
> incorporated, I did have a positive net for a few weeks, until my
> first invoice went out).
>  
> > Well... it works, so I won't bash it too much... and again I'm not an
> > accountant. I do feel its slightly wrong, though. I guess it is more a
> > feature of the modelling of account trees that gnucash supports (perhaps
> > it supports more than I understand). Its true that some asset accounts
> > stay assets even when their in credit, and some liability accounts stay
> > liabilities when they're in debit. That's what the contra-accounts are
> > all about. Other kinds of accounts, such as accounts payable and
> > receivable and GST Clearing can cross over between asset and liability.
> > According to my textbook an over-paid payable must (should?) be reported
> > as an asset on the balance sheet, while an over-paid receivable must
> > (should?) be reported as a liability at least under Australian
> > GAAP. 
> 
> You could always move the imbalance before reporting - it would make
> sense to have a specific transaction, as such a thing would be
> noteworthy.
> 
> Cam
> 
> 
> -- 
> Cam Ellison  Ph.D.  R.Psych. #01417
> 
> Cam Ellison & Associates Ltd.
> Management Psychology
> 
> RR 22    3446 Beach Avenue
> Roberts Creek  BC  V0N 2W2
> 
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pub  1024D/01045933 2001-02-01 Linas Vepstas (Labas!) <linas at linas.org>
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