What's The Difference Between GST On Payments Or Invoice Basis?
There are two main methods you can prepare your GST returns based on, these are:
Payments basis - This is when you prepare your GST return based on all the income you have received and expenses that you have paid for the GST return period. This is the easiest method to use for calculating GST returns.
Invoice basis – This is when you prepare your GST return based on all the income you have received and expenses that you have paid for the GST period PLUS how much your debtors (customers) owe you at the end of the GST period LESS how much your debtors owed you a the beginning of the GST period. The same applies for creditors (suppliers) including who you owed at the end of the GST period less who you owed at the start of the GST period. This is the most complex method to use for preparing your GST returns and it is compulsory to use this method if your turnover is over $1.3 million per year.
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