L1 GST Reconciliation

This workpaper will assist identifying errors in GST returns filed, account for timing differences, calculate required adjustments (e.g. for entertainment, home office and private use) and summarise items that need to be included in the next GST return.

It is best to prepare this workpaper after you have completed the other workpapers but before you prepare the other tax workpapers (for example, A1 & Q1-3b).

Recommended source documents: GST returns

Enter details of GST returns filed

In the table contained in rows 14 to 28, enter the details from the tax returns that have been filed.

  1. Select the applicable accounting basis in cell D9.
  2. Select the appropriate accounting period in cell D10.
  3. Enter details of the GST return in the applicable row.
  4. Indicate whether the GST payable or refund had been received or paid by balance date in column L. This will pull the amount outstanding into your reconciliation below.
  5. If you would like to include any variances from the GST output and input accounts in the general ledger, make sure the account codes have been entered in the set up sheet (see administrator for assistance) and the select Y include variance in cell L30. This will pull through the general ledger balances and include any variances in the reconciliation below.

Timing differences

This table will account for any timing differences between what has been filed and is in the accounts, particularly where your client is on the payments basis for GST.

  1. Enter details of any GST payments or refunds outstanding from prior years in cell L41. Include prior years only as any unpaid GST for the financial year in which you are preparing the accounts will be populated from the above table.
  2. Check accounts receivable and payables have populated from the G1 and M1 workpapers.
  3. Indicate whether unpresented cheques should be included from the F1 workpapers by selecting yes or no in cell I46.
  4. For payments basis clients, enter the value of cash on hand in cell L52.
  5. Enter details of any income received in advance in cell L53.

Ensure all GST refunds/payments have been coded correctly.

Reconciliation

Use this table to collate errors that have an impact on GST that identified while preparing other workpapers and make adjustments required as a result of the apportionment rules contained in the tax acts.

  1. Make sure you have uploaded all journal entries created and ensure the workpaper balances have been refreshed.
  2. Enter details of any income that was not recorded in the GST return, e.g. goods taken for own use, income received.
  3. Enter details of any income included in the GST return in error, e.g. dividend from power companies, interest received, finance fees.
  4. Enter details of expenses not claimed in the GST return, e.g. petty cash expenses, purchases paid for on balance date.
  5. Enter details of expenses included in the GST return in error, e.g. wages, finance lease payments, private expenses, purchases price of imported goods.
  6. Enter details of private use adjustments required, generally as a result of assets used for both private and business uses. Use the GST apportionment or mixed use assets calculators to assist in this calculation.
  7. Enter details of adjustments required by law in the other adjustments section. E.g. non-deductible entertainment expenses, use of home office expenses, prior year adjustments not made.

Check the following:

  1. Check that GST has been claimed/paid on all major asset purchases/sales.
  2. Hire purchase contracts are often a source of GST error.
  3. Compare this year’s discrepancy with last year’s discrepancy.
  4. Gross up GST received as per GST Returns adjusting for debtors if client is on cash basis, and compare with sales per Financials. The point of this exercise is to isolate whether the problem is in the area of income or expenses.

Adjustment required

Where adjustments are required to future GST returns, create an adjustment sheet to record what adjustments are required in the next GST return.

If the client prepares their own GST, send a copy of the adjustment sheet to the client.

If the firm prepares the GST returns, put a copy of the adjustment sheet on the client’s GST file.