I'm in charge of the accounts for a business that deals with reimbursements between clients and another party.
On our invoices, we charge GST on the services component (which goes to the business as revenue), and then the second component is the reimbursement for an expense in anticipation (often Government fees, or an overseas associate), which does not have GST.
In the case of the overseas associate expense, this expense is an estimated amount which is to be spent on a bill from an overseas associate in due course. So, based on current exchange rates and quotes from the associate, we estimate how much the bill will be and we charge the client this amount to cover it, as part of the invoice.
When we receive the bill from the associate and pay the bill, the exact amount paid in AUD is hardly equal to the exact amount we received from the client, so we often encounter losses or gains from charging the client too little or too much.
My boss has been absorbing these gains or losses (rather than applying it as an overpayment to the clients account) and not accounting for them properly, so my question is, will this gain or loss have GST on it and affect BAS calculations?
The component in the invoice that is set aside for the bill was not charged with GST and the payment made to the associate didn't include GST, however, as we absorb whatever is left over, my boss is concerned that this would affect taxable revenue.
So, does it?
Thanks in advance for your time.
On our invoices, we charge GST on the services component (which goes to the business as revenue), and then the second component is the reimbursement for an expense in anticipation (often Government fees, or an overseas associate), which does not have GST.
In the case of the overseas associate expense, this expense is an estimated amount which is to be spent on a bill from an overseas associate in due course. So, based on current exchange rates and quotes from the associate, we estimate how much the bill will be and we charge the client this amount to cover it, as part of the invoice.
When we receive the bill from the associate and pay the bill, the exact amount paid in AUD is hardly equal to the exact amount we received from the client, so we often encounter losses or gains from charging the client too little or too much.
My boss has been absorbing these gains or losses (rather than applying it as an overpayment to the clients account) and not accounting for them properly, so my question is, will this gain or loss have GST on it and affect BAS calculations?
The component in the invoice that is set aside for the bill was not charged with GST and the payment made to the associate didn't include GST, however, as we absorb whatever is left over, my boss is concerned that this would affect taxable revenue.
So, does it?
Thanks in advance for your time.