4/11/18

Changing methods - example

• For the year ended 30 June 2017, Smith has the following receipts:
• Accounts tendered: $50,000
• Cash received: $40,000
• Outstanding invoices: $10,000 (Assume these are paid in 2017-18 year)
• What would be the effect if he:
• Used a cash basis for y/e 30 June 2017, but changed to accruals from 1 July 2017 (i.e. for the
y/e 30 June 2018)?
• Used an accruals basis for y/e 30 June 2017, but changed to cash from 1 July 2017 (i.e. for the
y/e 30 June 2018)?
• IE: what amount would be included in his assessable income for the year ended 30 June
2017? What would be included in his assessable income for the year ended 30 June 2018?

Copyright School of Taxation and Business

57
Law UNSW

Changing methods - example

• Example 1: Cash to accruals
2017 (Cash) 2018 (Accruals) Total

• Example 2: Accruals to cash

2017 (Accruals) 2018 (Cash) Total

Copyright School of Taxation and Business Law UNSW 58