GST reconciliation checks that your commission documents and GST ledger explain the amounts on your business activity statement (BAS). Work from each commission and deduction to its reporting period, then account for earlier balances and payments to the Australian Taxation Office (ATO). A matching net bank deposit alone does not establish the GST payable.
Define the GST Reconciliation You Are Completing
Start with the brokerage entity, its GST reporting period and its confirmed cash or non-cash accounting basis. Record the entity name and Australian business number beside the period boundaries in your workpaper. Use the basis that applies to that entity, and compare it with the accounting software’s settings.
On a cash basis, GST generally follows payments received or made, including part payments. On a non-cash basis, attribution generally follows the earlier of an invoice or any payment. GST credit claims also depend on the applicable tax-invoice requirements. The ATO’s BAS accounting-basis guidance explains these rules.
The month a commission was earned can differ from its GST reporting period. Keep the earning period as a separate analysis field if you use it to compare trail. For BAS reconciliation, follow the GST attribution rules for the entity.
Use this procedure for the commission portion of your reconciliation. Add the brokerage’s other sales and purchases before tying out the complete BAS.
Collect the Commission Records and Opening Balance
Collect the source documents and earlier balances before comparing the current period’s GST. Keep the following records together:
- Recipient-created tax invoices (RCTIs), with their supporting commission statements.
- Tax invoices for aggregator fees and other deductions.
- Adjustment notes, including recipient-created adjustment notes where applicable, and the original transactions they change.
- Bank statements, settlement remittances and evidence of amounts offset against commissions.
- The GST transaction ledger, opening trial balance and unpaid commission or fee balances.
- Previously lodged BAS figures, saved activity statements and ATO payment or refund records.
Use the RCTI statement guide to identify the source documents. If a posted commission does not match its documents, correct that record through the RCTI and Xero process before reconciling the period.
Bring forward the prior reconciliation’s closing GST balance. Separate lodged GST awaiting payment from unfiled transactions and cash-basis timing items. Match the lodged component to the earlier BAS and subsequent ATO settlement. Do not replace an unexplained opening balance with zero.
Keep missing or disputed records on an exception list. Give each item a reference, GST amount at issue, responsible person and next action. An unexplained difference remains open even when the bank deposit matches.
Build the GST Reconciliation Workpaper
Build one workpaper row for each commission, fee or adjustment so the net settlement can be traced to its separate GST components. Use the document’s GST amount and tax treatment. A deduction from commission can have a different GST treatment from the commission itself.
A Hypothetical Commission Settlement
Assume a GST-registered brokerage has posted a taxable commission of $10,000 plus $1,000 GST. Its aggregator withholds a taxable fee of $500 plus $50 GST. A supported clawback reduces a previously reported taxable commission by $1,000 plus $100 GST.
For this example, the documents support full settlement of all three amounts in the current period, including the offsets. The brokerage is entitled to the fee’s GST credit. The clawback qualifies for a decreasing GST adjustment in this period, with the required adjustment document held. These assumptions must be checked against a real agreement and its documents.
Settlement Components
| Source | Amount excluding GST | GST effect on net liability | Settlement effect | Explanation |
|---|---|---|---|---|
| RCTI-A commission | $10,000 | $1,000 | $11,000 | Taxable commission |
| FEE-A aggregator fee | -$500 | -$50 | -$550 | Expense GST credit |
| ADJ-A clawback | -$1,000 | -$100 | -$1,100 | Reduction of GST on the earlier sale |
| Total | $8,500 | $850 | $9,350 | Net receipt after both offsets |
The BAS example uses the accounts method. The ATO’s adjustment-reporting instructions put decreasing adjustments at label 1B. Report $1,000 at 1A and $150 at 1B: the $50 fee credit plus the $100 decreasing adjustment. This gives $850 net GST.
The workpaper records the clawback as a signed $100 reduction in the GST liability. Its BAS presentation puts that $100 at 1B. Treating the $9,350 deposit as one GST-inclusive sale would report $850 at 1A and zero at 1B. That omits both the fee credit and the separately reported decreasing adjustment. The net liability would coincide, but the reported components would be wrong.
The ATO’s adjustment-note ruling explains adjustment documentation. A clawback label alone does not establish the tax treatment. If you need to check one amount’s arithmetic, use the GST calculator.
Copyable Excel Workpaper
Copy the tab-separated block into cell A1 in Excel. It is free to copy and edit. The extra RCTI-B row illustrates a posted $2,000 commission plus $200 GST that remains wholly unpaid at period end. The example uses a cash basis, so its $200 remains outside this period’s BAS.
Positive GST increases the net liability. Negative GST reduces it. The ledger column records each transaction’s signed GST component, not its gross value. The current-period column records the signed amount allocated to this BAS.
Source reference Type Net excluding GST Source GST signed Receipt or payment reference Reporting allocation Ledger GST signed Current BAS GST signed GST variance Variance explanation Unresolved items
RCTI-A Commission 10000 1000 SETTLEMENT-A Current period 1000 1000 =G2-H2 Fully settled None
FEE-A Aggregator fee -500 -50 Offset SETTLEMENT-A Current period -50 -50 =G3-H3 Fee credit supported None
ADJ-A Clawback adjustment -1000 -100 Offset SETTLEMENT-A Current period -100 -100 =G4-H4 Decreasing adjustment supported None
RCTI-B Unpaid commission 2000 200 No receipt Later receipt period 200 0 =G5-H5 Cash-basis timing difference Carry forward until receipt
TOTAL =SUM(C2:C5) =SUM(D2:D5) =SUM(G2:G5) =SUM(H2:H5) =SUM(I2:I5) Expected totals are $10,500 excluding GST, $1,050 source GST and $1,050 ledger GST. Current BAS GST is $850 and the explained timing variance is $200. Add separate columns for the document date and settlement date when completing your own worksheet. Record its entity, period boundaries, basis, opening balance and preparer’s name above the transaction schedule.
This worksheet supports the reconciliation. It does not decide a transaction’s tax treatment or replace the full BAS workpaper.
Use the Xero GST Reconciliation Report
The Australian Xero GST Reconciliation report compares filed amounts with transaction GST and the GST account balance. Follow Xero’s Australian report instructions:
- Check that relevant earlier activity statements are finalised or older BAS reports are published.
- In Reporting, open All reports and select GST Reconciliation under Taxes and balances, or search for the report.
- Set From and To, then update. Choose a start point with a reconciled opening balance. Xero recommends a start giving zero opening unfiled GST.
- For new activity statements, enter GST on sales and purchases from finalised statements in the Filed columns. Older published BAS reports populate these figures automatically.
- Review collected, paid, unfiled and GST account movements against the workpaper. Preserve the completed report because manually entered Filed and Adjustments figures are not automatically saved.
Before continuing, the period, opening balances and filed inputs must agree with your supporting records. Keep proposed current BAS amounts separate from previously filed figures.
For cash-basis GST reconciliation, inspect receipt timing. Under Xero’s GST settings, cash reporting uses payment dates, while accrual reporting uses transaction dates. In the example, unpaid RCTI-B explains $200 between the posted ledger GST and the cash-basis BAS. On a non-cash basis, assume that invoice triggers attribution in the current period: include its $200 and remove that timing difference.
An omitted receipt is different. If the brokerage received RCTI-B’s payment this period but the software still shows it as unpaid, locate the bank entry and correct the payment record. Keep the receipt evidence with the correction.
Explain Differences Before Finalising BAS
Trace each variance to a document or transaction before changing the BAS. Check the largest unexplained amounts first, then clear smaller differences.
Checks for Common Differences
| Possible cause | Check | Next action |
|---|---|---|
| Omitted RCTI | Compare the source statement references with posted commissions | Post the missing supported transaction and allocate its GST period |
| Duplicate posting | Search the same source reference and gross amount in the ledger | Correct the duplicate through the accounting system and retain the audit trail |
| Unsupported tax code | Compare each line’s tax rate with the tax invoice and supply type | Correct the coding from the evidence, then rerun the report |
| Late clawback or fee adjustment | Match the adjustment document to the original transaction | Identify the adjustment event and apply its required GST period |
| Payment crosses periods | Compare the payment record with bank evidence and the confirmed basis | Carry forward valid timing items, or correct an inaccurate payment record |
| Earlier lodged difference | Compare the lodged BAS with the saved report and later ledger changes | Document the original error and select the ATO correction route |
Xero’s discrepancy guidance also identifies mismatched reporting bases and prior BAS payments as sources of differences. A ledger balance containing an ATO payment cannot be compared directly with the current period’s sales GST.
The ATO distinguishes a GST adjustment from a GST error. An adjustment follows a later change to a transaction that was correct when reported. An error was wrong when reported. A newly received adjustment document therefore needs a different assessment from a duplicated sale on an earlier BAS.
For an earlier error, follow the ATO’s BAS correction guidance. A later BAS correction depends on the applicable conditions. Otherwise, revise the original BAS. Keep the affected return, GST amount, supporting documents and correction decision together. Editing a Xero transaction does not itself correct the lodged return.
Complete the BAS Tie-Out and Keep the Evidence
Match the workpaper’s GST on sales and purchases to the proposed BAS, then explain the GST control balance. Keep genuine timing items visible instead of posting a journal solely to force the account to zero.
Completed Hypothetical Bridge
Use the same cash-basis example, with an opening GST liability of $300 from an earlier lodged BAS. Assume that exact $300 GST component is paid to the ATO during this period. There are no other transactions, adjustments or opening timing items.
| Bridge item | GST liability movement | Supporting record |
|---|---|---|
| Opening GST control liability | $300 | Prior closing reconciliation and lodged BAS |
| Commission RCTI-A | $1,000 | Posted RCTI-A |
| Fee credit FEE-A | -$50 | Posted fee tax invoice |
| Clawback ADJ-A | -$100 | Posted adjustment document |
| Unpaid commission RCTI-B | $200 | Posted invoice and unpaid balance |
| Prior BAS GST payment | -$300 | Bank record and ATO allocation |
| Closing GST control liability | $1,050 | $300 + $1,000 - $50 - $100 + $200 - $300 |
Under the accounts method, this example contributes $1,000 to 1A and $150 to 1B, giving $850 net GST. The closing control liability is $1,050: $850 for the proposed BAS plus $200 on unpaid RCTI-B. The earlier $300 liability has been settled. The bridge has no unexplained difference.
Keep the $200 carry-forward item against RCTI-B with its receipt check and next-period review owner. Once payment occurs, trace it into that period’s cash-basis reporting and remove the carry-forward item without posting the commission twice.
Have the reviewer record their name, review date, report version and conclusion. For this example, the conclusion is that the $9,350 settlement agrees, 1A and 1B trace to their documents, and the entire $1,050 closing balance is explained. Retain the worksheet, source documents and saved reports with that sign-off so another person can repeat the reconciliation.
