I've searched for an answer to this query without success. If someone can provide a link to an answer to the exact same questions, please do. Otherwise perhaps someone can assist me with an answer.
My client received a notice that some of the GST claimed was not going to be refunded.
The GST return was for a previous year, so the GST balance is now in Accounts Payable, payable to "The Receiver General".
The balnce is negative because the total of GST paid on purchases was greater than the GST received on sales.
Let me use some round figures to explain what I'm trying to achieve:
Balance of Account Payable to (actually from) "The Receiver General" is -1,000.00 (negative);
Notice that the claim is being reduced by 200.00 to 800.00, and that interest of 30.00 will be paid to the client.
From other posts about this subject, it appears that I should generate a new invoice to "The Receiver General" with the following columns (note that I use 6-digit account numbers):
Item Description Amount Account
Assessment Reduction 200.00 <which account?>
GST Interest -30.00 4nnnnnn Interest Revenue
Which account should the reduction be allocated against?
I am aware that Accounts Payable is a liabilty account, and that the interest is treated as income, but I don't think that the GST claim reduction amount should be classed as income or an expense, I want to reduce the amount due from "The Receiver General".
So, my question is: Am I right in issuing an invoice for this, and if so, what account do I use for the reduction amount?