Taxation answers with Roy Sanderson of RJ Sanderson and Associates, Dandenong.
I have a business which issued an invoice for $5500 to one of my customers in June for work completed.
The client has told me he will not be able to pay me until August, which is 60 to 90 days after I did the work. A friend of mine has told me that I must include this money as income in my tax return and include the GST in my June Business Activity Statement. Is this correct?
There are two issues in this question. Firstly, the income is not treated as taxable income if the money is not received before 30 June and you are part of the Simplified Tax System (STS).
To be part of STS, it must be stated on your income tax return when completed. If your turnover is under $1 million for 2006 (which is being increased to $2 million for next year) then you are eligible to enter STS and the benefit, along with some other benefits, would make it worthwhile.
The GST issue depends if you are registered for GST under the cash basis or the accruals basis. You will find this written in small writing on the Business Activity Statement on the front page in the top left corner. If you are registered on the cash basis then you only include the GST which is actually received by you, not on the basis of you sending a customer an invoice.
