Pay GST Component Only of an Invoice in Strata Master

Where there is a large insurance claim such as a Home Warranty Defect settlement, often the insurance company will pay the contractor directly.  

This will result in the Agency being required to pay the Excess and the GST amounts and also claim the GST taxation credit.

The example below covers paying the gst portion only and the excess to the creditor.

This article assumes a User is familiar with Strata Master and most processes within Strata Master

The Process Summary

This payment is achieved by the following steps:

1. Create an Owners Corporation receipt for the total of the insurance claim
2. Enter the original invoice in full inclusive of GST 
3. Enter a credit note for the proceeds paid by the insurance company exclusive of GST
4. Pay the creditor
5. Journal to reverse the original receipt

Using the following example the payment of $10,000 to the creditor is achieved as follows:

                Total amount of approved claim                                $99,000
                 Less        (a)   GST component                                        ($ 9,000  )
                                 (b)  Excess amount                                          ($ 1,000  )

                Net Proceeds paid to the Contractor                        $89,000 - this amount is entered as a credit Note leaving $10,000 payable

Step 1 Create an Owners Corporation Receipt

MENU:                 Accounting > Receipting > Owners Corporation Receipt

• Select the Owners Corporation
• Select account Insurance claims 
• Enter the amount of the claim to the insurance company (no GST) e.g. $99,000
• Enter a description relating to the details of the contractor invoice
• Tick Banked but do not backdate the receipt

Accounting > Enter Creditor Invoices 

Step 2 and 3 Entering the Invoice and Credit Note

1. Enter the Invoice
2. Select an Owners Corporation
3. Select the Creditor
4. Enter the invoice details
5. Enter the total GST inclusive amount $99,000
6. Ensure that the GST component is shown e.g. $9,000
7. Save the invoice
     
8. Enter the Credit Note
9. Select an Owners Corporation
10. Select the Creditor
11. Enter a description relating to the proceeds paid by the insurance company  
12. Enter the amount GST exclusive of the insurance payment as a negative figure
13. Delete the GST component
14. Save the credit note

Step 4 Pay the Creditor                                

Accounting > Pay Creditors

                                Pay the creditor the GST and excess components of $10,000         

Step 5 Journal to Reverse the Original Receipt

                                Accounting > Adjustments > Journal Entry

                                Create the following journal:

                                Dr:                         A/c Insurance Claims (same account as the receipt)
                                Cr:                          A/c Cash at Bank

                               Amount:              Of the original receipt NO GST

                               Description:       Reversal of receipt from Allianz to allow payment of creditor

Notes

The Bank Reconciliation should be checked to ensure that the journal has been correctly created.

If there is sufficient Cash at Bank to cover the total invoice entry it will not be necessary to create the Owners Corporation receipt and the Journal entry.