Changing your accounting basis

Your accounting basis refers to your method of accounting that affects how you report GST. In Australia, the two methods are known as Cash and Accrual, while in New Zealand they are known respectively as Payment and Invoice, as well as a third Hybrid option.

Visit either the ATO website or IRD website for specifics on your eligibility and reporting implications.

When changing your accounting basis, there are some things to consider.

If changing from	Consider this
cash to accrual	Care needs to be taken that some figures are not left out of BAS/GST reporting after the transition date. This is because when reporting in the BAS/GST periods prior to the transition, supplies, acquisitions, GST collected and GST paid was only reported when payments were received and made in cash during those periods. The danger is that invoices that were not paid during the cash reporting period may not be included on future accrual based BAS/GST Returns when they are paid after the transition date.
accrual to cash	Care needs to be taken that some figures are not reported twice in the transition BAS/GST period. This is because when reporting in the previous BAS/GST period to when the change is made, all recorded sales and purchase invoices would have been reported on the BAS/GST return regardless of whether or not they had been paid. The danger is that the invoices that were not paid in the prior BAS/GST period may be re-counted on a future BAS/GST return when they are paid after the transition date.

If changing from

Consider this

cash to accrual

Care needs to be taken that some figures are not left out of BAS/GST reporting after the transition date. This is because when reporting in the BAS/GST periods prior to the transition, supplies, acquisitions, GST collected and GST paid was only reported when payments were received and made in cash during those periods. The danger is that invoices that were not paid during the cash reporting period may not be included on future accrual based BAS/GST Returns when they are paid after the transition date.

accrual to cash

Care needs to be taken that some figures are not reported twice in the transition BAS/GST period. This is because when reporting in the previous BAS/GST period to when the change is made, all recorded sales and purchase invoices would have been reported on the BAS/GST return regardless of whether or not they had been paid. The danger is that the invoices that were not paid in the prior BAS/GST period may be re-counted on a future BAS/GST return when they are paid after the transition date.

Where do I specify my accounting basis?

Australia

If you are lodging your BAS manually, you can specify your accounting basis in the BAS info settings.

If you are lodging your BAS online, your accounting basis is populated by the ATO, so contact them if it needs to change.

New Zealand

You can specify your accounting basis when preparing your GST return.

Separate cash/invoice reports are available for GST/Tax, and profit and loss.

Want to learn more?

We might not be experts in changing your accounting basis, but our community forum is a great place to connect with business professionals who are happy to share their insights.