Complete your GST Reconciliation report with a conversion balance
Learn how to complete your GST Reconciliation when your organisation has a conversion balance for GST. We'll use an example to show how it works.
If you're a new organisation, or have recently registered for GST after using Xero for a while, follow the process for completing the GST Reconciliation after you start with GST.
- Your organisation's conversion date is 1 April 2015.
- You use the invoice basis to account for GST.
- Your organisation files GST every 2 months, with the last GST return pre-conversion being for the 2 months ended 31 March 2015. This return was completed outside Xero.
- Your conversion balance for GST is 5473.61 credit, that is, you owe GST to Inland Revenue.
- You've entered your conversion balances into Xero, including details of invoices and bills outstanding at conversion date.
|20 Dec 2014||3664.22||477.94|
|1 Mar 2015||3838.52||500.68|
|15 Mar 2015||4723.58||616.12|
|5 Mar 2015||3889.01||507.26|
|15 Mar 2015||2218.12||289.32|
|16 Mar 2015||1668.06||217.57|
|24 Mar 2015||118.19||15.42|
|29 Mar 2015||625.36||81.57|
|31 Mar 2015||1424.91||185.86|
Run GST Reconciliation report to check conversion balances
Run your GST Reconciliation report to the day immediately before your conversion date to check that your opening balances are correct.
- In the Reports menu, select All Reports.
- Under Tax, click GST Reconciliation.
In the From date field, select the first day of the GST period before the date of the oldest unpaid invoice or bill.
In this example, your oldest unpaid invoice is dated 20 Dec 2014. The first day of the GST period before that date is 1 Dec 2014. Enter 1 Dec 2014.
In the To field, enter the day before your conversion date.
In this example, enter 31 Mar 2015.
Review the GST Reconciliation report and confirm:
- All opening balances are 0.
The total unfiled GST collected matches GST on outstanding invoices at conversion date.
Total unfiled GST paid matches GST on outstanding bills at conversion date.
The only item in the GST Account Transactions section is your GST conversion balance. The amount is your total GST conversion balance minus GST on outstanding invoices at conversion date plus GST on outstanding bills at conversion date.
The GST Owing closing balance equals your GST Account Transactions balance.
- At the bottom of the report, the GST Account Summary balance equals your conversion balance for GST.
The GST Account Summary balance and the GST Account Balance match.
If your report does not meet these criteria, review your conversion balances and invoices and bills outstanding on conversion date and re-enter them if necessary.
Save your report as a draft
When you've confirmed your report is correct, click Save as Draft.
Complete your first GST return in Xero
Following the end of your first GST period after your conversion date:
Update your GST Reconciliation report
After you've published your first GST return in Xero, update your GST Reconciliation report.
In this period you filed your pre-conversion GST return outside Xero, and paid your GST owing on that return to Inland Revenue.
- In the Reports menu, select All Reports.
- Click the Drafts tab.
- Click the draft GST Reconciliation report to open it.
Don't change the From date. Change the To date to the end of the GST period you've just finalised. Click Update.
In the Filed column, enter the GST collected and paid amounts from your GST returns for 31 March and 31 May.
- If you made an adjustment on your GST return, enter it in the relevant Adjustments field.
Check the GST Account Transactions are correct. This section of the report shows transactions coded directly to the GST account.
In this example, you imported a purchase and used the tax rate 'GST on imports'. You also paid your conversion balance GST owing to Inland Revenue.
Check the GST Owing section is correct.
- Check the GST Account Balance matches the GST balance in your balance sheet at 31 May.
Check the GST Account Summary balance matches the GST Account Balance.
- Click Save as Draft.
Update the report for subsequent GST periods
Repeat Step 4 after you publish each subsequent GST return. Save as Draft to retain the figures you enter for each GST period.
You can export the report to Excel, PDF or Google Sheets at the end of each GST period to save a snapshot at that point in time.