Home – New Forums Money matters GST and income tax for lay by sales

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  • #1236323
    ksolo
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    Hi all,

    While I am waiting for my accountant to give a confirmation, I would like to seek personal experience here.

    Our customer pays 6 monthly instalments. We are on cash basis so we report G1 (Total sales) and 1A (GST on sales) when we receive payment.

    How do I record the cost of goods sold for BAS cash basis?
    Given that the customer has not made final payment yet, do I record it in the BAS period that goods was purchased by the company?

    #1236352
    Paul – FS Concierge
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    Nice question.

    I hope the community can help.

    Cheers
    ~Paul

    #1236410
    Williamsheikspare
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    Hi all,

    While I am waiting for my accountant to give a confirmation, I would like to seek personal experience here.

    Our customer pays 6 monthly instalments. We are on cash basis so we report G1 (Total sales) and 1A (GST on sales) when we receive payment.

    How do I record the cost of goods sold for BAS cash basis?
    Given that the customer has not made final payment yet, do I record it in the BAS period that goods was purchased by the company?

    I hope community will help,
    Cheers,

    #1236423
    ksolo
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    I’ve got an update from my accountant.

    – Record the cost of good sold of lay-by goods in the year that lay-by agreement
    – Pay GST on each payment (cash basis)
    – Record full sales price in the year of when final payment is made

    Refer to TR 95/7 – https://www.ato.gov.au/law/view/document?locid=%27TXR/TR957/NAT/ATO%27&PiT=20010620000001
    – the trading income of the seller is assessable on an accruals, rather than a cash, basis

    Example 1

    42. On 20 June 1994, Peta entered into a lay-by sale agreement with Shopmart Stores Ltd to purchase goods priced at $300. Peta is required to pay $30 deposit and the balance by 2 September 1994. The goods are removed from display, labelled with a reference to the lay-by sale agreement, and set aside in an area of Shopmart’s store separate from its other stock.

    43. The full sale price of $300 is derived by Shopmart as income under subsection 25(1) in the year of income ended 30 June 1995. The goods held by Shopmart which are subject to the lay-by sale agreement are trading stock on hand under section 28 for the year of income ended 30 June 1994.

    #1236456
    Paul – FS Concierge
    Keymaster
    • Total posts: 3,321
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    Thank you for updating us!

    Cheers

    Paul

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