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Level 1

Accounting for Cash Boost on lodged BAS retun.

I paid the $755 owing on my Jan-Apr BAS and lodged it with the ATO via STP. Then I received the $10,000 cash boost, minus the $755. How do I now account for the $10k payment, given that BAS return is paid and lodged? Also, will the ATO refund the $755 I paid or hold credit it against my next BAS?

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Best answer June 10, 2020

Best Answers
Content Creator

Accounting for Cash Boost on lodged BAS retun.

Hi iM58,

 

If you have already marked the BAS as paid in QuickBooks Online and matched that payment from the bank feed, you just need to record the Cash Boost payment. You can use the below steps to create an account for this, and see here for more information on recording the Cash Boost. Please note the below account setup is a guide and we would also recommend you reach out to your accountant or bookkeeper to ensure this account is set up for your business correctly:

 

  1. Select Accounting and then Chart of Accounts from the left hand menu. 
  2. Select New. 
  3. Select the Account Type Other Income and the Detail Type of Other miscellaneous income.
  4. Enter the Name as ATO Cash Boost Stimulus.
  5. Select Save and Close.

 

Then you can categorise the payment from your bank feed to this account. We are unable to advise how the ATO will proceed with the $755 owed and you will need to contact them to determine if they are refunding this as cash or a credit. How you then record this depends on what they advise. If they are refunding as cash, you can also allocate the amount to the Cash Boost account created and the amount will end up being the full $10,000. If they provide it as a credit for the next period, you can look to adjust the opening balance on the Cash Boost account to record the amount, or journal it from a clearing account if preferred.

 

 

-Kass

 

 

 

View solution in original post

12 Comments
Content Creator

Accounting for Cash Boost on lodged BAS retun.

Hi iM58,

 

If you have already marked the BAS as paid in QuickBooks Online and matched that payment from the bank feed, you just need to record the Cash Boost payment. You can use the below steps to create an account for this, and see here for more information on recording the Cash Boost. Please note the below account setup is a guide and we would also recommend you reach out to your accountant or bookkeeper to ensure this account is set up for your business correctly:

 

  1. Select Accounting and then Chart of Accounts from the left hand menu. 
  2. Select New. 
  3. Select the Account Type Other Income and the Detail Type of Other miscellaneous income.
  4. Enter the Name as ATO Cash Boost Stimulus.
  5. Select Save and Close.

 

Then you can categorise the payment from your bank feed to this account. We are unable to advise how the ATO will proceed with the $755 owed and you will need to contact them to determine if they are refunding this as cash or a credit. How you then record this depends on what they advise. If they are refunding as cash, you can also allocate the amount to the Cash Boost account created and the amount will end up being the full $10,000. If they provide it as a credit for the next period, you can look to adjust the opening balance on the Cash Boost account to record the amount, or journal it from a clearing account if preferred.

 

 

-Kass

 

 

 

View solution in original post

Level 1

Accounting for Cash Boost on lodged BAS retun.

Thanks Kass that's great.

Level 2

Accounting for Cash Boost on lodged BAS retun.

Allocating the payment this way, as other income, then impacts the P&L and consequently the balance sheet, when for tax purposes the payment isn't to be treated as income.  Where else would you suggest it is allocated so it doesn't impact the P&L.

Level 1

Accounting for Cash Boost on lodged BAS retun.

I have the same question - how do we make this sure doesn't affect P&L? 

(Or should the $10,000 affect P&L and be treated as revenue? But then I would pay 30% tax on it?)

Content Creator

Accounting for Cash Boost on lodged BAS retun.

Hi JamesCasey,

 

The Cash Boost payment is a government grant which can be considered as income. If you followed the steps in the guide on recording the Cash Boost, the account type will be included on the P&L as income and categorised as a tax free or 'out of scope' amount. We can only provide information on how this payment can be recorded in QuickBooks Online; for questions on how this will impact your P&L and/or your business, you will need to speak with your accountant as we are unable to provide advice specific to your books. 

 

-Kass

Level 2

Accounting for Cash Boost on lodged BAS retun.

Hi @JamesCasey 

I've checked this with my accountant and understand it a bit better now.

Although the $10k isn't taxable income it does need to show in the P&L and subsequently the balance sheet as net income, as it is money injected into your business and impacts your financial position.

It will be dealt with for tax purposes as an adjustment by your accountant when they lodge your return.

 

As a trust, in my case, the net income will be distributed to the beneficiaries as always however they will only be liable for tax on a percentage of that distribution.

eg:  Profit from P&L = $50k which equals $40k taxable income & $10k non taxable cash boast stimulus (80% taxable)

Thus net income for distribution is $50k to 5 beneficiaries = $10k each.

Each beneficiary will have to declare and pay tax on 80% of their distribution ie $8k  (they get $2k distribution tax free) 

(NB: there is further tax implications if you distribute to a company as when these funds are paid out as dividend at a future point individuals will be liable for tax on the full amount not 80% of it  - hence we have been advised to not distribute to our company entity this financial year but that is advice you would need to seek independently from your own accountant for your situation)  

 

Unfortunately in QB there isn't an easy way to exclude single accounts by customising a report such as the P&L.  It can be produced but it's painstaking to set up the first time - you have to select in each account other than the one other income account you set up for the Cash boost.   It may just be easier to mentally subtract the $10k off your P&L when considering your taxable income.

(the option to exclude accounts not only select them in customised reports has now been raised with the  QB development team - apparently) 

 

 

Level 2

Accounting for Cash Boost on lodged BAS retun.

Just remembering to take $10,000 off the P&L isn't so easy now that the amounts are not so even.
An income and expense account that didn't affect the Balance Sheet and P&L would be very beneficial.
Saying that the accountants have to adjust for it in our returns doesn't really help us get an overall view of our obligations.

QuickBooks Team

Accounting for Cash Boost on lodged BAS retun.

Hi surchling, 

 

We're sorry to hear that. Income and expense accounts are by default included on the P&L. We can see how it may be inconvenient when reviewing your P&L, however the payment does need to be recorded as income and does need to display on the P&L as it impacts a company's finances. We understand the importance of getting a good understanding of your reports, keep in mind you can export the report to excel and exclude any information as required. We would also suggest consulting with your accountant for a better overall view of your obligations if required.

 

-Steven

Level 2

Accounting for Cash Boost on lodged BAS retun.

My accountant already said -
"Hey your cash boost shouldn't be affecting P&L"
I replied "there's no way to show non assessable accounts in QBO"  (is there?)
We had the same discussion over the Company Income Tax Expenses.
That's why I have the questions!

QuickBooks Team

Accounting for Cash Boost on lodged BAS retun.

I understand, at the current moment income accounts show on the P&L, but I see where you are coming from and have submitted your feedback for greater customization of the P&L report.

Level 1

Accounting for Cash Boost on lodged BAS retun.

Hi, As a doctor I am not the perfect accountant, but here is an imperfect solution that does the trick... because the cashflow stimulus is definitely not assessable income - so it is silly to muck up your P and L.

 

For me I follow the suggested QB procedure to the letter, except instead of using an income account (the miscellaneous income account) I called it "ATO Non Assessable Cashflow Stimulus" and allocated it as owners equity instead.

 

That way it can still balance out the clearing account and not show on the P and L. 

And if you like you can do something with the total of this account at the end of the year on the balance sheet. 

Not perfect, but for me OK. 

Level 2

Accounting for Cash Boost on lodged BAS retun.

Thanks, I was leaning towards something like this now I'll just trust my gut.