When operating under the payments basis for GST, the tax is recorded as soon as money changes hands—not when the invoice is issued.
What Does This Mean?
- GST is accounted for at the time of actual payment, whether you’re receiving or making a payment.
- This includes part payments—each payment is recorded in the GST return for the period in which it was made, even if the full amount hasn’t been paid yet.
Why It Matters
This method gives a real-time view of your cash flow, making it easier to manage GST obligations without over-reporting tax you haven’t actually collected yet.
If you’re unsure which GST basis applies to your situation, check with your tutor or a qualified accounting professional.