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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.