A2000 ONLINE SUPPORT DEPARTMENT 

     KNOWLEDGE BASEWHAT IS THE PROCESS TO SUBMIT GST?              

DESCRIPTION:         What do we need to note when submitting GST returns?

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CORRECTNESS OF GST REPORTS

Users must test the correctness of GST reports to ensure their submission is good.

1. Gross Profit Test

In a typical trading operation, the GST to pay is net of the sales (output tax) to the purchase(input tax)–the difference between these 2 values is generally the gross profit of the company.

For example, if the Sales is $100,000(collect$7,000inOutputTax) and the Cost of Sales is

$80,000 (paid $5, 600 in input tax), the Gross Profit is $20,000 and net payable to the tax department is $1,400 (equivalent to 7% x Gross Profit).

Note: If you have a Gross Profit of $20,000 with a GST payable of $3,000, then something could be wrong. It warrants further investigation whether this figure should be accepted.

2. GL Ledger Listing for GST Versus GST Grouping Details

Every transaction with a GST component posts to the General Ledger for GST Input Tax and Output Tax, and can be viewed by the GL Ledger Listing report. Every transaction that selects a tax code (sales or purchase invoices) posts the GST type to the line details, and shows up in the GST Grouping Details report.

Therefore the GL Listing report can be used as a test to the GST Grouping Details, whether the transactions are complete. 

Note: These 2 reports are extracted from different data sources (by design) - the GL post to one table while line details are post to another. This design to extract reports from separate sources, and ensuring they tie - is a self-checking mechanism that report is good. As such there may be 1-cents differences in these reports due to mathematical rounding issues. It does not mean the reports are out of balance by that 1-cent up or down.

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USE THE GST CLEARING ACCOUNT

We encourage users to transfer out the GST portion into a clearing account, pending payment to the tax department. This clearing account will keep the input/output tax intact to match the GST reports by details.

Example: At the end of March 2021 (for01/01to31/03Quarter), assuming we have a total

GST-Input Tax of $5,600 and a GST-Output Tax of $7,000,we should do this step:

A. Create a new GL Chart of Account called "GST Clearing Account" (Liability type)

B. At end of the quarter, i.e. 31-March, we will pass a GJ journal entry to zeroized the GST Input & Output tax amount to the GST Clearing A/c. The entry will look like this:

(*) – to zeroized the debit balance of $5,600 in the GST Input Tax Account. 

(**) – to zeroized the credit balance of $7,000 in the GST Output Tax Account.

The GL balance for GST Clearing A/cwillthushaveanetof$1,400in Credit.

C. To make a payment to the tax department in the following quarter:

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HANDLING OF ROUNDING DIFFERENCE

It is possible when dealing with multiple decimals we faced with a report that is out of balance by 1-cent. 

Example:

In passing the journal entry to the clearing account, we will anchor the correct number based on the GST F5. Therefore the GST Clearing A/c will be passed as followed:

The GL balance for GST Clearing A/c will thus have a net of $1,400.01in Credit.

Note: By tying the 2 reports so that GST per F5 and GST per TB, the 1-cent difference flows in to the Rounding Difference A/c (which is a P&L item).

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