Evopos recommends Accrual Accounting to calculate tax (GST/VAT) rather than Cash Accounting for the following reasons:
•Cash Accounting is normally only allowed below a specific turnover. Even if you are currently under this we would imagine in most cases, it will not be long before you exceed it and then you would have to change anyway.
•Most Dealers and Retailers owe more on purchases than is owed to them on sales so it makes financial (Cash Flow) sense to use Accrual Accounting.
•Cash Accounting is not normally allowed if using the Used Vehicle Tax scheme
•Because we can have multiple payment methods on a single Sale (including Trade-Ins etc), it is harder to link the payment amounts to work out the GST/VAT amounts
It is still possible to calculate tax on a Cash basis (pay tax on the money you receive, and claim back tax on the money you spend), however certain reports such as VAT Return / BAS Worksheet may not be applicable.
The reports you would normally produce to show the GST/VAT to pay would be:
Reports to confirm Accrual Accounting figures
•BAS Worksheet / VAT Return - This give a summary of the figures in a worksheet which makes it easy to submit.
You can then verify those figures from the following reports. These can be produced in one go by Accounts / Quick Reports / Monthly Reports (Tax).
•Sales Invoices - Lists each sale for the period with Excl, Tax, Incl amounts.
•Purchase Transactions - Lists each purchase transaction for the period with Excl, Tax, Incl amounts.
•Used Scheme Sale Book - Lists each Unit sold for the period with the Purchase price, Sell price and Tax payable or claimable. In UK the tax is payable on the margin. In Australia the Tax is claimable on the purchase price.
Reports to confirm Cash Accounting figures
You cannot produce a GST / VAT summary for Cash Accounting at this time. However you can calculate the figures from the following reports:
•Purchase Transactions by Paid Date - Take a report such as Purchases, set Criteria to PaidDate between Dates, Paid=Yes.
•Payments Received by Paid Date - Take a report such as Payments by Number, set Criteria to PaidDate between Dates, Paid=Yes, and Sales_Type <> JOURNAL. Note: If all your sales have the same tax rate we can calculate the Tax from this figure. If they are not we have to list out our sales Lines for the other rate(s) and make an adjustment.
•Sales Lines by Tax Rate - (see above)
•Used Units Sold - Technically you are not allowed to operate a Cash Accounting scheme when you are using a special Used Scheme, however if you are calculating the Sales tax on the money received and are not claiming the Tax back on Used scheme purchases you could list the Used Scheme Units sold in that period to show the Tax to claim back on the Purchase price.
There is also an alternative method where you can take the normal GST / BAS statement (AUS), or VAT Return (UK) and then make an adjustment for the opening and closing Debtors and Creditors.