Simple account setup for australian GST

[David Harrison]

On 30 Oct 2004 10:45:31 +1000, Ian Willis <wil197 at iprimus.com.au> wrote:
> Hi All
> 
> I have relatively simple requirement, however I am a simpleton when it
> comes to accounting.
> 
> I currently do contract work primarily to a single agency.
> 
> I invoice them through a contracting agency and receive weekly payments
> into a company savings account.
> Of this payment 1/11 is the Australian Good and services Tax (GST) that
> is paid to the government quarterly.
> The bank allows downloads of my statement in a number of formats that I
> would ideally like to suck staight in however if they need to be mangled
> (one of the formats is comma delimited format). I can mangle them to add
> as much detail as it necessary to make importing easier.
> Against this things that I purchase that have gst are redeemable against
> the GST liability. At the end of each quarter it would be nice if I
> could just look at the two numbers if I have imported everything
> correctly.
> What I would like to know is what is the best/correct way to set up
> gnucash (account structure) to meet these requirements. I bit of magic
> would be nice but the underlying structure is the most important thing.

The easiest way to set up the accounts is to have 2 accounts set up as
liability accounts:

Liabilities
     |-GST collected
     |-GST paid

Post the GST collected to the GST collected account, and post the GST
paid on purchases to the GST paid account.  At the end of the quarter
when you pay the liability, do an entry to credit the bank account,
credit GST paid and debit GST collected.  This will zero the account
balances each quarter.

A quick example:
1. Make a purchase that includes GST of $10, you would post as part of
your entry a debit to GST paid.
2. Made a sale that included $15 GST, you would post as part of your
entry a credit to GST collected
3. When you fill in your return, you grab the ending balance in each
account.  In this case, GST collected - $15, GST paid $10, which
results in a net payable to the gov't of $5.
4. Write a cheque for the payable - Credit bank $5, Credit GST paid
$10, Debit GST collected $15.

David