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ANSWER ID:9298, 9299, 31857

Your accounting basisrefers 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 you're changingIf changing fromConsider this
from cash to accrualCare 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.
from accrual to cashCare 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.

In AccountRight, you'll specify your new accounting basis in the BAS info settings (Australia) or when preparing your GST return (New Zealand). That's the easy part. What's tricky is ensuring you report the correct amount of GST (see the table above). This is where you might need help from an accounting advisor.

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.


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titleRelated topics

Lodge your activity statement (BAS or IAS - Australia)

Prepare your GST return (New Zealand)