Australia GST setup

[DaveC49]

Hi Christopher,

It is not going to matter whether you treat the GST accounts as Asset
accounts or Liability Accounts. It will just mean that what is a credit to a
liability account will be a debit to an asset account and vice versa. If the
Tax Ofiice is going to end up owing you money the majority of the time
because of the nature of your business, then using asset accounts may make
more sense. In this case the asset account is behaving as an Accounts
Receivable asset account.

There is no difference between a contra account and a normal acccount. They
would both be setup as accounts of type liability (or type asset). The
difference is that in the liability contra account a debit will increase the
balance of the contra account whereas a credit increases the balance of the
liability account ( and again vice versa for an asset account and an asset
contra account). Another way of saying this is that a liability account has
a credit balance, whereas the liability contra account has a debit balance.
( and again vice-versa for Asset accounts and asset contra accounts. They
are just a convenience used by accountants when dealing with items like tax
liabilities and depreciation where you need to also keep track of the
GSTpaid on purchases and GST collected on sales as well as the actual GST
BAS payments to the ATO. In the case of depreciation you generally need to
know the starting value of the asset as well as its depreciated value and
the accumulated depreciation and by using the contra accounts these are all
recorded as balances of the appropriate accounts.

My understanding is that the RCTI is just an invoice raised by the receiver
on behalf of supplier where there is an agreement in place between the
supplier and the receiver that the supplier will not create and supply an
invoice to the receiver for goods or services along with the other
requirements specified in ATO ATO Ruling GSTR 2000/10.  In that case the GST
on the RCTI should only be on the purchase. Are you using a single invoice
to record details for the supply and then the subsequent resale of the item?
If not where does the GST on Sales component come from?

I noticed in your original post and RCTI example you did not specify whether
the splits were debits or credits to the accounts specified. I will have a
closer look at your example and set out what I think the split components
should be  for both the the cases of using Asset accounts to record GST or
Liability accounts and will put them up in another post.

Cheers 
David



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