How to record company income tax returns refund in quick books?

Hi Deepika338,

Thanks for posting in the Community! Have you enabled Company income tax (PAYG Instalments) option on your tax settings? If yes, you can record the payment or refund by going to GST tab. When your activity statement is lodged, QuickBooks will automatically post a journal entry against the PAYG Instalment Liabilities account and the ATO Clearing account. Therefore, any payment recorded in GST tab will reflect on the ATO Clearing account. 

On the other hand, you can also enter the company income tax refund in QuickBooks Online via journal entry. However, it would be best to consult an accountant to ensure that you've allocated it to the correct category.

For more detailed information, you can also check this article: Reporting PAYG Instalments on BAS and IAS. 

Feel free to drop a comment below if you have any other questions, we're here to help you. 

How we can record income tax returns refund and deposit??? can you please explain step by step. I am asking about tax returns not GST or IAS.

Thank you for your response, Deepika338. Since the information you're trying to record is not related to GST or IAS, it would suggest to consult an accountant. This is to ensure that you'll be provided with the accurate information on how to record a company income tax refund in QuickBooks Online. If you don't have an accountant, you can find one here. 

Message us back if you have any other questions. 

Useless response...

Technically it is a refund of overpaid income tax, which you've paid via the company PAYG instalment, recorded under the "PAYG instalment paid" account - a current asset. The refund is techincally retrieval of part of that prepaid current asset. A journal entry to reflect that would make sense - .debit bank account, credit the PAYG instalment paid.

In theory the refund would not be more than the balance in that account.

Hi Max,

Thanks for posting in the Community!

If you are lodging your BAS in QuickBooks Online, you can record GST refunds and payments in the GST center. If the refund you wanted to categorise and add in QuickBooks is in your downloaded transactions in the For review tab, you can allocate them to the ATO Clearing account. This is the account where payment and refund amounts for BAS/PAYGI are allocated.

Please note that the system does not allow you to record GST payments or refunds allocated to a default tax account like PAYG Instalment Liabilities.

I recommend also contacting your accountant for this to better help you and avoid messing up your books. 

Check this link to learn more about BAS payments in QuickBooks Online.

Drop by again in the Community if you have other QuickBooks Online concerns. 

FYI Income Tax Refund is NOT the same to GST refund.

Prepaid Income Tax Instalment is a prepayment, therefore an asset. GST colected/paid is just goverment fees pasing through the company.

Hi Max,

If you wanted to track the income tax payment, you can create an expense transaction in QBO and allocate it to taxes paid category. 

However, I recommend contacting your accountant to get more accurate accounting advice on how to properly track the payment and to avoid messing up your books. At the moment QuickBooks Online doesn't have the ability to record company income tax return since QBO only tracks GST.