Warning: We recommend that you do not use the file until it has been corrected. Unless you understand the full accounting implication of the above steps there is a very high chance that the integrity of the data may be impacted by changes you make in the Xero organisation. This may not surface until sometime later and could result in major rework required.
If the file loaded for conversion was set to the wrong accounting basis you can choose to reconvert the file. This will attract a reconversion fee of $220 in addition to the original package conversion fee.
How to Manually Adjust the Accounting Basis
If you decide to change your accounting method in Xero post-conversion you will notice the following:
- Your GST reconciliation report will have unfiled amounts
- The GST reconciliation report will no longer balance to the GST report and the balance of the GST account in your chart of accounts.
- Your BAS will no longer reflect what you have reported and filed with the ATO in MYOB.
This is all due to the difference between remitting GST for Cash and Accrual methods.
During the conversion process, we have already made a number of adjusting entries at various dates in Xero pre and post-conversion dates to compensate for the difference in GST handling between MYOB and Xero. Some of these entries will need to be readjusted to cater to the change to GST basis method.
Providing this advice is outside of the scope of services we offer so we recommend you confirm with your accountant or bookkeeper what adjustments are required and how to calculate them.
1. Change Accounting Basis in Financial Settings
Steps to update the Accounting Basis in Xero,
- In the Accounting menu, select Reports.
- Under Tax, click Activity Statement.
- Click Settings.
- Under GST Accounting Method, select the method you are changing to.
- Click Save & Continue
2. Record a GST adjustment
Once you’ve changed the GST accounting method, you may need to make an adjustment so your Activity Statement is correct.
For each quarter from when the transactional history commences in Xero, you will need to compare the MYOB and Xero BAS Report and make compensating adjustments to ensure that the figures in Xero match the data in MYOB. If GST adjustments have been captured in the quarter you could amend the existing adjustments alternatively please see below:
As per Xero's Help Centre To record the adjustment in Xero:
- Create a manual journal.
- Code all entries to the GST account using the relevant tax rates, and date the journal so it’s included in the correct period.
For example, you need to:
- Reduce sales (G1) by 11,000 (inclusive of 1,000 GST).
- Reduce purchases (G11) by 2,200 (inclusive of 200 GST).