Accruals

If your accounting is on an accrual basis, that means that the financial data matches the paperwork. When an invoice is raised, the revenue is recorded. When a bill is received, the expenditure is recorded. Larger businesses (with a turnover of greater than $10m) and public companies must use this method as it better shows the financial position of a company and matches the position with the work done.

The alternative is a cash basis in which income and expenditure are only recorded when the payments are made (in or out). This better represents the cash position and means that GST is only due on amounts received, and bad debts are more simple to handle.

Your tax agent will advise which process best suits your business, and how your Business Activity Statements will be prepared.