Hi there, I’m Nick Roberts, I am an accountant who has been working in public practice for the last 12 years. 

I was an early adopter of Xero in 2007, and have been working with this platform  (as well as other accounting systems since). I would like to use my expertise to help people with their use of Xero and other accounting software solutions.

For this blog post I would like to cover GST reconciliations and how to check that the entries in your GST return are correct. 

So you got your end of year accounts back from your accountant and there is a note included with them saying that you have additional GST to pay. You wonder how did this occur and how your accountant worked this out. 

Well this blog post is for you I am going to cover the following, how to check your GST return in Xero for transactions that should and shouldn’t have GST. 

How to Check your GST Return in Xero:

Run your GST return

1. In the Accounting select GST Return.

Click on the draft return. 

Click on the GST Audit report. 

The GST system in New Zealand is very simple and only a few items are exempt from GST. these are as follows; 

1. Financial Transactions, including bank fees, interest, dividends etc. 
2. Wages paid to staff includes PAYE paid to Inland revenue.
3. FBT paid to Inland Revenue.
4. Fines. 

The GST audit report in xero is made up of all the transactions that make up your GST return including GST exempt transactions, this report is broken down into three different sections GST On Expenses GST On Income and No GST. 

This report can be very large so I suggest you export it to a spreadsheet and check it that way. 

So you should check the three sections to make sure that the correct transactions have been entered into the correct places based upon this list; 

1. Financial Transactions, including bank fees, interest, dividends etc. 
2. Wages paid to staff includes PAYE paid to Inland revenue.
3. FBT paid to Inland Revenue.
4. Fines. 

This seems pretty easy right, however there are a few fish hooks to consider here; 

• If you have leased any business asset, then there will be Interest and principal portions on this, you cannot claim GST on the interest portion but can Claim GST on the Principal portion. (Your leasing company will supply a schedule at the start of the lease showing how the payments broken up) 
• If you have brought a business asset via hire purchase, then you can claim the full cost of this asset (excluding interest) up front.  
• I will cover how to set these up in a future blog post to automate this for you (If you would like to know about this earlier then feel free to contact me)

Now that you have checked your GST return and know that everything in it is correct, the next step is to Check that the balance in your GST return matches the GST on your balance sheet. 

This will be covered in the next blog post. 

Thank you for your time in reading this, if you have any questions or suggestions for future posts please contact me at nick@zero-tohero.com or on 022 405 9312. 

Also consider  subscribing to our regular newsletter for updates and notifications of when new posts are available.         

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