The income tax payable account may be overstated or understated in the Statement of Financial Position, how can I make an adjustment in the current financial year to amend this account?
The main cause is a reconciliation error made in a prior financial year. The reconciliation on the ATO Income Tax Account and the Integrated Client Account shows an overstated or understated Income Tax Payable account.
To make an adjustment for Income Tax Payable
Navigate to Fund level > Transactions > Fund Expense > Fund Income Tax Payment
- Enter the difference into Over/(Under) Tax Allocated
|Amount ($)||Effect (Trial Balance)|
|Negative||Reduce the overstated balance|
|Positive||Increase the understated balance|
To make an adjustment to PAYG Installment
Navigate to Fund level > Transactions > Fund Expense > Fund Activity Statement
- Enter Over/(Under) Tax Allocated
- Enter the contra-amount in the PAYG Income Tax Installment variation.