GST Refund - Manual Processing

Allan2021 · ‎October 17, 2021

I'm new to QB online having previously used an older desktop Reckon Accounts product. This is our first GST Qtr using QB Online. Begging forgiveness in advance if this has been answered, but I couldn't find an answer that seems to fit these particular circumstances.

I do the books for my partner who is a sole trader (no company structure) health professional and hence always has a GST Refund as her sales are mostly GST Free. We have been and wish to continue to do the GST lodgement manually - not using QB Online to submit the return.

So when we submit the details to the ATO for her BAS, it reduces the amount payable on her Qtrly PAYG payment. I had worked out a way to do this in our desktop Reckon accounts, but am not confident that the process I used to use will work here. (The PAYG amount is never showing in her books as it's paid via her taking the money as "Drawings" and paying the ATO personally).

What's the best way to deal with this GST refund situation using QB Online?

MaryLandT · ‎October 17, 2021

I'm here to provide the steps on how to record GST refund in QuickBooks Online, Allan.

There's a Run reports on your new GST experience and this is where you can record the refund.

Select GST on the left hand menu.
Under To Pay, click Record Refund.
Select the Account the payment will be deposited into and the Date of the refund.
Input any Memo for the transaction.
Click Save.

If you don't lodge your BAS through the GST page, you'll have to create a journal entry to record the refund. For the steps, please check the article: Recording a GST refund.

To know what accounts to debit and credit for the journal entry, I recommend consulting with your account. They can provide specific instructions so your books have accurate records.

I'm also adding this link if you need to record GST payments in QuickBooks: Recording a GST payment (BAS Payment). It provides detailed steps and a sample screenshot for your visual guide.

Stay in touch with me if you have follow-up questions about recording a GST refund in QuickBooks. I'm always right here to help you.

View solution in original post

MaryLandT · ‎October 17, 2021

I'm here to provide the steps on how to record GST refund in QuickBooks Online, Allan.

There's a Run reports on your new GST experience and this is where you can record the refund.

Select GST on the left hand menu.
Under To Pay, click Record Refund.
Select the Account the payment will be deposited into and the Date of the refund.
Input any Memo for the transaction.
Click Save.

If you don't lodge your BAS through the GST page, you'll have to create a journal entry to record the refund. For the steps, please check the article: Recording a GST refund.

To know what accounts to debit and credit for the journal entry, I recommend consulting with your account. They can provide specific instructions so your books have accurate records.

I'm also adding this link if you need to record GST payments in QuickBooks: Recording a GST payment (BAS Payment). It provides detailed steps and a sample screenshot for your visual guide.

Stay in touch with me if you have follow-up questions about recording a GST refund in QuickBooks. I'm always right here to help you.

Allan2021 · ‎October 17, 2021

Thanks MaryLandT. I did see the link to Recording a GST refund etc, but the problem is that there is no actual GST refund! The ATO simply reduces the PAYG payable by the amount of refund and that is not paid via the business accounts as for a sole trader its a personal tax expense.

We used to be in a partnership before I retired and that was simple as the refund was actually paid to the partnership bank account and then we each paid our individual PAYG accounts. But now that it's only my partner, there is no actual refund paid into any bank account. As I said the ATO simply reduces her PAYG account by the amount.

What I have been doing B4 using Reckon was to record it as a deposit to the Tax liability account with the amount immediately taken as drawings so that it never actually showed in a bank account. This kept everything clean and was approved by our accountant. The problem now is that the refund is only a ledger entry on the ATO's side.

Maybe I'm missing something, but to me GST is held in trust for the ATO by the business entity, whereas PAYG is a personal tax liability which does not get recorded in the business accounts - my accountant agreed with this.

Does what I'm saying make sense? Am I missing something (like somehow recording the personal PAYG liability in the business accounts?)

Allan2021 · ‎October 17, 2021

MaryLandT, I think I see how to do it from the second link you provided and a bit more thinking. So if I record the details as per paying GST (where the GST on purchases will exceed that on sales), then I'll be recording the PAYG payment against the PAYG Instalment Liabilities account. Is this correct? And if I do that, how does the PAYG Liability show in reports? (Obviously with this approach she would pay the amount involved from the business bank account instead of taking it as drawings and then paying it from her personal account)

IntuitSheila · ‎October 18, 2021

Hi Allan2021,

The article provided by MaryLandT is how we can record a GST payment and refund if you're not lodging your BAS in the GST center of QuickBooks Online.

If you need more help with how to account the BAS and PAYG refund, it is best to consult with an accounting professional. That way they can provide specific information so your books can have accurate record.

Furthermore, if the GST refund is a cash boost which is a credit in the activity statement. You may want to check this article on how to How to set up and record Cash Boost stimulus payments.

Visit us again if you have other questions. Have a nice day!

Allan2021 · ‎October 23, 2021

Thanks MarylandT. I've now processed this and the second link in your reply was very helpful, once I understood what it was doing. Very grateful for your assistance.

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GST Refund - Manual Processing