The application australia email list of this criterion is particularly relevant with regard to VAT . When a delivery of goods or services is made, the person carrying out the transaction must declare and pay the VAT in the settlement period to which the invoice corresponds, even if it has not been collected. In turn, the recipient can deduct the tax even if it has not been paid to the supplier.
This time lag between what is declared and what is received can cause cash flow problems for companies, especially when invoicing public administrations, which often have problems with late payments. This does not occur in the cash basis, since it allows transactions to be declared at the time they are collected. But it affects both income and expenses, which cannot be deducted until they have been paid.
The cash criterion
The special cash-basis regime is a new way of declaring VAT, taking into account the moment in which the tax is collected. That is, instead of declaring invoices by issue date, each settlement includes the VAT quotas of income and expenses actually collected and paid in the period being settled.
The deadline for filing tax returns is 31 December of the year immediately following the year in which the transactions were carried out. Transactions whose collection or payment has not taken place by that date will be settled in the same way. The cash VAT criterion came into effect on 1 January 2014 .
