Workpapers - Fix Income Tax workpaper that incorrectly shows current year June PAYG installment
Despite the fact I raised this years ago, it was ignored when building the new Workpapers (ironically, this workpaper is one of the few that mimics the original Workpapers layout).
The Income Tax workpaper (attached):
a. correctly shows 4 x current year PAYG Instalments in the 2025 Tax to pay/(refund) section
b. correctly shows the prior year June PAYG Instalment in the Balance sheet income tax reconciliation section
c. incorrectly automatically includes the current year June PAYG Instalment (copied from the section above), in the Balance sheet income tax reconciliation section
99.99% of the time, the prior year June PAYG Instalment will have been paid in the current year and therefore b is correct.
99.99% of the time, the current year June PAYG Instalment will NOT have been paid in the current year and therefore c is incorrect (and we have the additional and unnecessary work of reversing it EVERY. SINGLE. TIME).
Sam Gray
shared this idea
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Daniel Bland
commented
There are third-party tools - like RecHound - that can do the balance sheet rec much easier.
Quick video here highlighting the features:
https://www.rechound.com/video-demoIf you like it, you can link it to your Xero and start a free non-obligation trial here:
https://app.rechound.com/starttrial -
Sam Gray
commented
On the Income Tax workpaper, the first section Tax Provision per P&L has a Less PAYG installments (sic) section.
Xero prefills the dates (e.g. for 2020 FY workpapers):
September 2019
December 2019
March 2020
June 2020All good so far, you can enter the PAYG Instalments that will be included on the tax return.
The final line FY20 Tax to pay/(refund) then agrees to the company tax return.The second section Balance Sheet Income Tax Reconciliation has a Less PAYG installments (sic) section.
Xero prefills the dates (e.g. for 2020 FY workpapers):
June 2019This is good, June 2019 instalment is usually (99.99%+ of cases) paid/recognised in 2020 FY (after 1 Jul 2019).
And it copies from the first section the dates (and amounts) of:
September 2019
December 2019
March 2020All good so far, these instalments are usually (99.99%+ of cases) paid/recognised in 2020 FY.
Then it also copies from the first section the date (and amount):
June 2020Wut. Why?
Whoever built this workpaper obviously knows June instalment is usually paid/recognised the following year (as they intelligently demonstrated including June 2019 in this very section of this very workpaper).
So why is June 2020 included when it is known that it is usually paid/recognised the following year?Our options:
1. Complete the first section wrong (exclude the June 2020 instalment, e.g. make nil), so it doesn't agree to the tax return but the Balance Sheet Income Tax Reconciliation section is correct.
2. Manually add a line to the second section on every workpaper to reverse the June 2020 instalment. Silly waste of time.Can Xero please just fix the workpaper to work correctly and be consistent?
Thank you
P.s. instalments (per ATO), not installments