Claim back the GST on debts you will not collect

When you are GST-registered, you pay the output tax on an invoice in the GST return for the period you issued it, even if the customer never pays. If you later write that invoice off as a bad debt, you can claim the GST back as bad debt relief once the conditions are met. The same rule works the other way for your own bills: input tax you claimed on a bill you have not paid within 12 months of its due date must be repaid.

The GST bad debt relief report brings all of this together. It lists every written-off GST invoice with the amount you can claim and when, shows the bills whose input tax must be repaid, and gives you the figures to add to your GST return.

Accessing the Report

Navigate to Finance → Reports and, under Tax, select GST bad debt relief.

At the top of the report, choose:

• GST return period: the return you are preparing. Use the This GST period and Previous GST period links to fill it in quickly. The periods follow the GST periods set under My Company → Financial Year (for example, quarterly ending March, June, September and December).
• As of Date: the date the report is worked out at. It defaults to today.

Click Apply to update the report. Use Download Excel to export it.

Part 1: GST Return Figures

The first table gives the figures for the chosen GST return period:

• Box 7, Bad debt relief claimed is the GST you claim back on bad debts in this return.
• Box 11, Bad debt relief claimed in this return is Yes or No.
• Box 6, Bad debt relief repaid on payments received is output tax due again when a customer pays a debt you already claimed relief on.
• Box 7, Input tax on bills unpaid 12 months after the due date shows input tax repaid (-) or claimed again once the bill is paid (+).
• Box 5, Purchase value of those bills shows the matching reduction (-) or the value declared again (+).

Part 2: Refund for Bad Debts

This table has one row for each GST invoice that has a write-off. For each one you see the invoice and customer, the GST charged and the period its output tax was accounted in, payments received, the amount still owed, the write-off, and:

• GST Claimed is the GST you can claim back on the written-off amount.
• Status tells you where the claim stands: Not yet claimable (with the date it becomes claimable), Claimable, or Time limit passed.
• Claim By is the last date you can claim, 5 years from the date of the supply.
• Debtor Insolvent and Steps Taken To Recover The Debt record what you did to collect.
• Keep Records Until is the date you must keep the records to.

Relief can be claimed from 12 months after the invoice date (or earlier if the debtor becomes insolvent), and must be claimed by the Claim By date. Until the claim window opens, the row shows Not yet claimable and the date it opens.

Recording the Claim on the Invoice

Each claim is managed from the invoice it belongs to. Open the invoice and find the write-off in the Invoice Activity section. It shows the GST bad debt relief you can claim, the date it can be claimed from and the date to claim by. There you can:

• Click Mark Claimed once you have claimed the relief in a GST return, or Not Claimable if you will not claim it. Mark Claimed works from the date the relief becomes claimable.
• Choose Debtor insolvent if the customer has been made bankrupt, wound up, or is under a similar insolvency process.
• Enter the Steps taken to recover the debt, such as reminders and demand letters, and save.

Part 3: Bills Unpaid 12 Months After Their Due Date

Input tax you claimed on a bill that is not paid within 12 months of its due date must be repaid in the GST period in which the 12 months end. This table lists those bills with the input tax to repay and the date to repay from.

1. 1 Find the bill in the table. A bill appears once it is 12 months past its due date.
2. 2 Check the date, and click Repay Input Tax.
3. 3 Confirm. The repayment is booked and counted in the GST return figures.

When you pay the bill later, the input tax can be claimed again, and the report shows it in the return figures for that period.

Frequently Asked Questions

What's Next?

• Writing Off an Invoice to record a bad debt
• Accounts Receivable Aging to spot invoices that are at risk of not being paid
• Setting Up Tax Registration to register for GST in Officaid