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 how to fix any issues that you have found when reconciling your GST return to GST on the balance sheet.
GST Reconciliation Report
I Have made some changes to Xero and have rerun the GST reconciliation report for the period 1st of April 2019 – 31 July 2019.
As you can see the balance has changed from the GST reconciliation report in the previous blog post https://www.zero-tohero.com/gst-reconciliation-to-balance-sheet/.
Original GST Reconciliation report Balance $355.98
New GST Reconciliation Report Balance ($854.33)
So how do we work out the differences here, there are two key areas to look at;
- Unfiled transactions
- GST Account transactions
.
Unfiled Transactions
Unfiled transactions are items that have not been included in Filed GST returns, this should be zero.
If it is not zero, then you need to work out the transactions our out of balance.
In this example, there are 3 places where unfiled transactions exist.
- Opening balance
- GST collected Apr to May 19
- GST paid Apr to May 2019
Opening Balance
If there is unfiled GST in your opening balance, this means that there is transactions prior to your start period, that have not been filed.
There are two possible outcomes for this;
The first is to run your GST reconciliation report back to when the opening balance of unfiled GST is zero.
The second that there is transactions in Xero prior to you being registered for GST.
In this example this Entity was registered for GST at the 01/04/19 and there are transactions prior to this, which need GST to be removed from them.
See this prior blog post on how to locate and edit past transactions https://www.zero-tohero.com/editing-reconciled-transactions/.
Unfiled GST for Apr to May 2019
What this means, is that transactions from your this prior period have been edited, or added into Xero after you completed the GST return for that period.
The easiest way to fix this issue is to compare your saved GST return for that period to the current account transactions that make up GST collected and paid currently.
Accounting – Account Transactions
It is best if you export both of these reports to excel, as it easier to search through the data and to match up the transactions.
I will cover my process for doing this in a future blog post.
In this example there were transactions added from a new bank account after the GST return had been finalised.
GST on Account Transactions
Review transactions you’ve coded directly to your GST account for the report period. If you’re using Xero’s default chart of accounts, the GST account is 820 – GST.
Transactions you’ll see in this section:
- Your GST conversion balance
- Purchases using the tax rate GST on Imports
- GST payments to and refunds from Inland Revenue
- Manual journal lines coded to the GST account
In this example there are two transactions in this section, the payment for the period Apr – May 2019 and a Payment for PAYE.
The payment for PAYE shouldn’t be there, please refer to this prior blog post on how to find and edit transactions https://www.zero-tohero.com/editing-reconciled-transactions/.
Now that these issues have been fixed, the GST reconciliation report matches the original report.
I hope that this has helped you in reconciling your GST, if you continue to have problems with this feel free to get in touch with me.
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.
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