• is a ledger account for recording:
  • GST Received from sales.
  • GST Paid to suppliers
  • GST Remittance (payment) made to the Government and
  • GST Refunds made by the Government to the business.

Procedure:

• GST received from customers:
  • It is a Liability to the Government.
    • You owe it to the Government.
    • Liability is increasing
    • Credit the GST Clearing Account.
• GST Paid to Suppliers by your business:
  • It is an asset to you
    • Government has to pay this back to you
    • Asset is increasing
    • Debit the GST Account.
• Balance in the GST Clearing account:
  • If the GST Account has a debit balance
    • It is an asset.
    • Seek refund from the Government.
  • If the GST Account has a credit balance
    • It is a liability.
    • Remit that amount to the Govt.
• The GST account acts both as an Asset account or Liability account, depending on the balance.
• If the GST Account is:
  • Asset:
    • Place it under Current Asset in the Statement of Financial Position.
  • Liability
    • Place it under Current Liability on the Statement of Financial Position.

An ASSET Account

GST Clearing Account
Date	Details	$	Date	Details	$
xx	Creditors	100	xx	Debtors	80
				Balance c/d	20
		100			100
	Balance b/f	20

 
In the Statement of Financial Position it will be entered under Current Assets:

Extract of Financial Position
Assets	$	$
Current Assets
Cash at Bank	xxx
Debtors	xxx
Stock	xxx
GST Clearing	20

 

A Liability Account

GST Clearing Account
Date	Details	$	Date	Details	$
xx	Creditors	100	xx	Debtors	180
	Balance c/d	80
		180			180
				Balance b/f	80

 

Extract of Financial Position
Liability	$	$
Current Liability
Creditor	xxx
Prepaid Revenue	xxx
GST Clearing	80

 

GST and Cash Flow Statement

GST cash Flow is due to the operating activity of the business. GST will appear under the Operating activities.

These can be the payments and receipts of GST:

1. GST received from Customers         +$xxx
2. GST Paid to Suppliers                      -$xxx
3. GST Payment to Government          -$xxx
4. GST Refund from the Government  +$xxx  (payment and Refund can not occur together)

Extract of Cash Flow Statement
Cash Receipts from Operating Activities	$	$
Cash form Customers	1500	nbsp;
GST received from Customers	2000	nbsp;
GST Paid to Suppliers	(2000)	nbsp;
GST Paid to Government	(2000)	nbsp;
GST Refund from Government	xxx
Net cash Flow from Operating Activities	(500)	nbsp;

 

brackets ( ) indicate a negative value

(payment and refund to ATO can not occur at the same time)