GST, VAT and Sales Tax
A consumption tax is a tax on the sale of goods or services. Around the world, they are referred to by different names and percentages.
The purpose of this guide is to show you how to generate the tax report for your reporting period and how to clear it from our accounting system.
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For this example, we will run a tax transaction report to file a business activity statement (BAS) for January 2023. We will then clear it from the accounting system. The following is for Australian tax jurisdictions, but you can apply the same principle in yours.
1. Run the tax transactions report for January 2023. You should get the total of both sales and purchases taxes. When the total sales tax collected exceeds the total on purchase, you must pay the difference back to the Australian Taxation Office (ATO).
2. Click on Add Payment in the Bank Transactions section to pay back the difference.
3. In the payment form, enter the following information. The GST Payable account should be selected, as this is very important.
4. Filter the Account Transactions by GST Payable account and by month. Our new entry should now balance it out to zero.
You can confirm this by looking at your Balance Sheet report. In the GST Payable account, there is now a zero balance.
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