This support guide will detail how voided invoices are handled in Xero, specifically concerning their impact on your Business Activity Statement (BAS) in Australia. Understanding this process is crucial for maintaining accurate financial records and ensuring compliance with ATO regulations.
Background
When an invoice is voided in Xero after the relevant activity statement has been finalised, Xero automatically treats that voided amount as an 'unfiled amount'. This unfiled amount is then included in your next activity statement. This functionality is in line with the Australian Tax Office (ATO) guidelines, which permit claims for previous periods to be made on subsequent activity statements. Xero's automated tracking simplifies this process for users.
Important Notes
Important notes
1. Unfiled amounts are only added if the last activity statement finalised was for the immediately preceding period. Ensure you have finalised all relevant activity statements in order from the oldest to the most recent for unfiled amounts to appear in your activity statements.
2. Unfiled amounts show if the original transaction was included on a previous BAS. For cash based reporting, a voided invoice will appear in unfiled amounts only if it was paid in a previous quarter and the payment subsequently removed, and the invoice voided in the current quarter. Unpaid voided invoices will not appear in the unfiled amount.
Identifying unfiled amounts
Xero provides clear messages on your BAS to indicate the presence of unfiled amounts:
- Unfiled amounts is on for this statement (before finalisation)
- Unfiled amounts was on for this statement (after finalisation)
To view specific transactions related to unfiled amounts, navigate to the Transaction tab within the activity statement.
PSC Recommendation: Why you should not exclude unfiled amounts
Due to the new evolution platform, invoice errors are currently resolved by voiding the invoices in all three systems (Vital, LigthSpeed and Xero), as a more streamlined solution is pending. This comprehensive voiding process, unlike simply creating credit notes in Xero, is essential for accurate franchise fee calculations, proper inventory restocking, and consistent sales reporting across all systems. This has resulted in a higher than usual number of voided invoices.
While Xero offers the option to exclude unfiled amounts, we strongly recommend that you do not use this option. Excluding them can lead to inaccurate BAS reporting as voided transactions won't be automatically accounted for. By default, you should leave the 'unfiled amount' feature turned on. Turning off unfiled amounts will permanently remove those amounts from any future reporting.
Key Points About Excluding Unfiled Amounts (Turning them off):
- Excluding unfiled amounts applies only to the current BAS.
- If you exclude them and finalise the BAS, the unfiled amounts are permanently removed and won't appear on future statements.
- You cannot exclude individual transactions; it's an all-or-nothing setting for the statement.
- You can manually adjust 1A, 1B and G within the BAS whether unfiled amounts are on or off.
- The system will track the user that turned the unfiled amounts off, within the history section of the finalised BAS.
Step-By-Step Instructions
How to finalise BAS
- Navigate to the Activity Statement section in Xero.
- Review the figures to ensure they align with your expectatons.
- Observe the message incating "unfilled amouns is on for this statement" if applicable.
- To see the specific transactions contributing to unfiled amounts, click on the Transaction tab within the activity statement.
- At bottom of the Activity statement, click Finalise or Finalise & create draft bill depending on whether there are amounts that are payable or refundable.
Frequently Asked Questions
Why are voided invoices treated as 'unfiled amounts' and included in the next BAS?
Xero processes voided invoices as 'unfiled amounts' to align with ATO regulations that allow claims for previous periods to be made on subsequent activity statements. This ensures that your BAS accurately reflects your financial position over time, even with retrospective changes.
What happens if I exclude unfiled amounts on my BAS?
Excluding unfiled amounts will permanently remove them from the current and all future BAS reports. This can lead to inaccurate reporting and reconciliation issues. It is strongly recommended not to exclude them, especially given the current Evolution Platform workflow for voiding invoices across all systems.
Can I choose which unfiled transactions to include or exclude?
No, the option to exclude unfiled amounts is an all-or-nothing setting for the entire BAS. You cannot exclude individual transactions.
How does voiding invoices in Vital, LightSpeed, and Xero ensure accurate reporting?
Voiding invoices consistently across Vital, LightSpeed, and Xero (as per the "One Poolwerx Way") is crucial because it ensures accurate franchise fee calculations, correct inventory adjustments, and consistent sales reporting. This comprehensive approach prevents discrepancies that could arise if an invoice was voided in one system but not others.
Next Steps
- Always ensure you finalise your activity statements in chronological order to correctly capture unfiled amounts.
- Refer to the Evo Platform | Essential Actions to Perform document for other critical actions to maintain data integrity.