This User Guide provides a list of common issues related to discrepancies in the final sections of the GST Reconciliation Report GST Owing and GST Account Summary. It also contains a list of key points to check if after reviewing all troubleshooting tips in our guides your GST Reconciliation Report is still not balancing.

Understanding Troubleshooting

Troubleshooting is never a linear process. A User Guide will never provide the exact solution to a problem. Sometimes, a variance may relate to an individual discrepancy, others it could relate to the same issue across multiple transactions, and in some instances, it could be a combination of different problems.

A Troubleshooting User Guides can simply provide general guidance by quoting a series of examples of the common issues and their resolutions. Users should still apply their troubleshooting skills to audit the data, identify the issue (or issues) and apply the proper solution to fix each discrepancy.

The key aspect of troubleshooting is untangling one issue at a time, never trying to fix all problems at once. Start by Identifying one issue and fixing it, then move to the next one. Never be alarmed if after resolving one discrepancy, the variance is even larger than before, if the solution applied to the issue is correct, then disregard the variance and move to the next problem.

In our previous user guides, we covered common troubleshooting issues with Unfiled GST amounts and incorrect transactions posted directly to the GST account. Generally, once these variances are resolved the GST should reconcile however, there are still instances in which other issues may affect the GST balance.

GST Owing Summary

This section provides a summary total of the sections above. The Closing Balance of this section should be as close as possible to $0.00.

è The GST Reconciliation Report - GST Owing

The GST Collected and Filed is the total of all GST Collected filed from the GST Collected Section of the report
The GST Paid and Filed is the total of all GST Paid filed from the GST Paid Section of the report
Less Payments made is the total of all transactions posted directly to the GST account (excluding GST on Imports)

The Closing Balance should be close to $0.00, a variance of a few cents to a couple of dollars (when a large number of BAS periods have been lodged in the specific Xero Organisation) is acceptable. This is a rounding issue, in some areas Xero calculates the GST by calculating the total gross amount of all transactions and dividing this total by 1.1. In other areas, Xero calculates the GST on each individual transaction and totals it together for the period. As two separate calculation methods are applied, it is expected to have rounding issues, which would accumulate with every period lodged.

However, if the variance is more than a few cents/dollars, additional investigation must be conducted. Common issues to review are:

GST posted on Conversion Balances
Note: Please refer to our User Guide on GST on Conversion Balances, as this is a topic on its own. However, if the GST is not calculated correctly at Conversion Balances, the variance will carry over until fixed in the Conversion Balances.
The number of BAS Payments is different from the number of lodgements

BAS Payments not matching the BAS Lodgements

When you review the GST Account Transactions section of the report, you are expected to see a line for GST Collected and a separate line for GST Paid matching every filed amount in the GST Collected or GST Paid Sections.

For example, in the image above the GST Collected and Paid sections display 5 periods where both GST Collected and Paid have been filed. Therefore, the GST Account Transactions should list 10 lines of GST transactions paid to the ATO (5 Collected and 5 Paid).

è The GST Reconciliation Report - GST Account Transactions

The next item to check is the amounts posted in these transactions, and make sure they match the amounts of GST filed for the same period.
Note: for Xero Organisations with a large number of BAS periods lodged, it is advisable to export the report to MS Excel and compare these values using formulas.

GST Account Summary

As detailed in our User Guide: how to read and understand the GST reconciliation report, the final section of the report is different depending on the GST Reporting Method of the Business (Cash vs Accruals).

This section of the report compares the GST calculated by the report with the balance of the GST account in the Balance Sheet as of the Closing Date of the Report. These two values should be the same.

Accrual GST Reporting

If a Business reports GST on an Accrual Basis the expected GST Closing balance should be as close as possible to $0.00. Also, this section of the report will only display two lines: GST Owing and Unfiled GST. If the GST Balance at the Report Closing date and the GST Account balance don't match, you will need to review all the troubleshooting tips outlined in our User Guides and make sure you have not missed anything.

è The GST Reconciliation Report - GST Account Summary

Cash GST Reporting

If the Business reports GST on a Cash basis, then the expected GST Closing balance should be close to the difference between the GST Collected on Receivable and the GST Paid on Payables (allow the same rounding issues mentioned in this User Guide). The GST Account Summary will display three additional fields in addition to GST Owing and Unfiled GST. These are:

GST in Accounts Receivable
GST in Accounts Payable
GST in Expense Claims > this field relates to the old Expense Claims feature and will not be covered in this user guide.

If the GST Balance at the Report Closing date and the GST Account balance don't match, you will need to compare the values reported in GST in Accounts Payable and Receivable against the Aged Receivables Details and Aged Payable Details reports as of the same closing dates.

Run the Aged Details Report

Go to Accounting > Reports
Select the report > Aged Receivables Detail

è The Aged Receivables Detail report
Select/Edit the following options
- Date > Select the last day of the BAS period you are reconciling
- Columns > Include the column: Outstanding GST
Click on [Update]
Repeat the same process for the Aged Payables Detail report
Compare the total value of outstanding GST in the Aged Detail reports against the GST balances in the GST in Accounts Receivables and GST in Accounts Payable in the GST Reconciliation report. If these values don't agree, you will need to conduct further investigation.

Common Issues to review

The most common issues that cause discrepancies between the Outstanding GST in the Aged Detail reports and GST in Accounts Receivable/Payable in the Reconciliation Report are when the allocated payment date of an Invoice or Bill is earlier than the Invoice or Bill Date and when Prepayment transactions are posted to an income or expense account.

Dates Discrepancy

When a user tries to allocate a payment to an invoice or bill that is dated prior to the Invoice or Bill date, Xero will show a warning in the Bank Feeds

è The Xero Warning message
In this case, the user should click on Cancel and review the issue date of the invoice or bill.
- If the date on the invoice or bill was entered incorrectly, this should be amended
- If the payment was made as a deposit for the invoice/bill, then the payment should be recorded as a Prepayment transaction and subsequently allocated to the Invoice/bill
If this warning message is ignored then a GST discrepancy will show in the GST reconciliation report.

è The GST Reconciliation Report - GST Account Summary
The GST in Account Receivable will also disagree with the total GST Outstanding in the Accounts Receivables Detail Report

è The Aged Receivable Details report
Search for negative values in the Aged Detail Report. When a payment dated prior to the invoice is allocated to this invoice, the Aged Detail reports will display the invoice values in negative. You should therefore remove the payment from the invoice/bill and either change the invoice/bill date or record the payment as a prepayment first and then allocate the Prepayment Credit note to the invoice.
Note: the Aged Detail Reports may also include correct negative amounts (Credit Notes), this should not be removed from the report.

Prepayments

If a Prepayment transaction is posted to an income or expense account that includes GST, this transaction will show in the GST Audit report (Under the GST on Income or GST on Expenses section). If you come across any Prepayment transactions posted to any income or expense accounts go to the transaction and change the assigned account to the Prepayments Asset Account (BAS Excluded).

Invoice and Bills dated in the Future

You should also check if any invoices or bills have been dated in the future by accident. This will affect either the Aged Receivables or Aged Payable reports.

Unbalanced GST Reconciliation Report

If you have come as far as this final section of our GST Reconciliation User Guide, you have probably understood how complex GST reconciliation can be. So what if after reviewing all the troubleshooting tips and applying any fixes your GST Reconciliation is still out? Are there any more areas to check? The answer is yes, there are still a few points to check before giving up:

Double-check the Start Date of the GST Reconciliation Report. This must always be the date of the Conversion Balances (Accrual GST Reporting) or the start date of the period immediately before the Conversion Balances (Cash GST Reporting).

If you make any changes by republishing any of the Activity Statement reports, the only way the GST Reconciliation report can update correctly is by exiting out the report completely and re-run it from scratch.

Check if additional Tax Codes have been created. Custom Tax Codes should only be created to track different types of BAS Excluded transactions. Users should never create additional Tax Codes that calculate GST. These additional Tax Codes are automatically excluded from both the Activity Statement and GST Reconciliation reports.

Verify the data coming from Third-Party applications. If you use any Third-Party software applications that integrate with Xero via the API, you should always test that the GST coming from these applications is calculated and imported correctly in Xero.

If you notice your GST Paid discrepancies are increasing, check that when you process the BAS Purchase transaction to the ATO the GST Paid is recorded including the cents as per the Filed Amount in the GST Paid section of the Report. Then offset the cents by entering a separate rounding line in the purchase transaction.

Check the GST on Conversion Balances. For Businesses that report on a Cash basis, if the discrepancy suddenly shows after the report has been correct for a while, make sure that no Receivable or Payable conversion transactions have been voided since the Conversion Balances were finalised.