What is the difference between cash accounting and cash GST reporting?
Cash accounting records expenses when you physically pay your supplier, and income when you physically receive the payment. Example: You may sell a TV today and not be paid for it for 60 days. Cash accounting would record this as income in 60 days when you were paid. On the other hand you may purchase a TV today and not pay for it for 60 days. Cash accounting would record this as an expense in 60 days. In GST terms this means that you may bill a customer today for $10,000 plus GST of $1,000. You are NOT liable to pay the GST liability until the customer pays you. It doesn’ t matter if you receive payment today or in 6 months time, you only pay the GST when you are paid. In the same way, you can only claim GST Input credits when you pay your suppliers. Remember that the amount of GST you report is proportional (1/11th) to the actual payment made or received during that period.
