Client Example  – client reports GST quarterly and PAYG Withholding monthly. Further the client received the minimum ATO Boost payment of $10,000.

The ATO will therefore offset the $10,000 credit against the BAS liability of $3,000 and refund the business the difference of $7,000.

1. Add your Business Activity Statement (BAS) as a Bill to Pay

To add a payable Bill in Xero, click on the Business drop-down box at the top of page, and then select Bills To Pay. Add a new Bill with the details from the BAS lodged with the ATO

Below is a screenshot of how to enter a bill using the above example.


2. Add the ATO Cash Flow Boost as a Credit Note

To add a Credit Note in Xero, return to the Bills To Pay section and click on New Credit Note. Ensure that the ATO details are the same as the bill created at (1) so the credit can be applied correctly.  For the credit amount, use the Clearing Account and mark as BAS Excluded.

Below is a screenshot of how to enter a Credit Note.


3. Applying the Credit Note against the BAS Liability

Where the BAS invoice has been raised before the Credit Note, Xero will prompt you to apply the credit as soon as the Credit Note is created.

If this is not the case, you can find the Credit Note by going back to the Bills To Pay section and find the Credit Note in the Awaiting Payment list.

To apply the credit against the BAS liability, click on the Credit Note Options drop-down box and select Allocate Credit.

This will then show the available Bills to offset the credit against. In the example used, the credit total is $10,000 and the BAS Bill is $3,000 so the credit applied will be the $3,000 and the remaining credit of $7,000 will be marked as a Cash Refund as shown below:

As the credit has been applied in full on the March 2020 BAS Bill, there is now no payment due as shown below:

Please note where the credit is less than the amount of the BAS Bill then there will be a balance payable.

4. Reconciling the Refundable ATO Cash Flow Boost

Once the ATO Cash Flow Boost has been received and is shown in the bank account, the Credit Note will automatically appear and match itself against the bank transaction:

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