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  • Accounting methods

    The amounts you include as assessable income in any income year depend on whether you account for your income on a cash basis or accruals basis.

    Note: the two types of GST accounting methods, which are referred to as cash and non-cash, have a different purpose and should not be confused with the income tax accounting methods discussed here.

    Cash basis

    If you account for your assessable income on a cash basis you include payments received during the income year regardless of when the work was done. You only include the income you actually receive payment for during the year as assessable income.

    Accruals basis

    The accruals basis accounting system includes all income earned during the income year even if you hadn't received payment for the work by the end of the income year. You should include all amounts you earn during the year as assessable income, even if payment for the work done is still outstanding at the end of the year.

    Example: Accruals method

    Dimitris manages his own business as a carpenter. He completed a contract in May 2018 worth $7,240 but his invoice wasn't paid by 1 July 2018. Using the accruals accounting method, he must include the $7,240 (less any GST) in his assessable income for the 2017-18 year.

    End of example
    Last modified: 25 Jun 2018QC 44456