Please can some one explain how this is worked out I can never understand it
The 958.65 is the customs GST paid and charged by the freight company
the 9,673.15 is the amount charge by the company who the goods were bought off over seas(no GST)
Here is just one entry I did for the freight company
What does the payment form have to do with the situation you described? It shows you paying 332.25, not 958.65.
No this is just one freight invoice that makes up some of the 958.65 as I said. It was incase I have done it wrong and you always say to give as much information as I can so I put an example of how I was doing it.
I just dont understand the tax summary (which is renamed in a PDF to GST summary)
I struggle with understanding the 958.65 as being in the total purchases.
In my mind it is not a purchase its a tax you dont buy it.
I did ask once before but someone said its the way it is but I would like to understand why so I can explain to my client
I see that in the freight expenses account that the customs GST(GST 15% on Imports) records as 0.00 so I still dont understand why its in the tax summary
OK, I understand now. I remember the earlier discussion, but I’m not going to read it again, because I’d probably just use the same wording to try to explain this. If I start fresh, maybe I’ll say it differently and the message will get through.
The Tax Summary report includes both sales and purchases subject to various tax codes. Each half (sales or purchases) includes columns for the untaxed amount, the tax, and the total. The untaxed portions are called Net Sales/Purchases. The taxes are obvious. And the totals need to be called something, so they are called Total Sales and Total Purchases. That does not mean you sold or purchased the tax, only that the columns include the total amounts from sales or purchases. There is no more logic to it than that.
Your drill-down on the freight account from the P&L properly shows zero because nothing was posted to that expense account for that transaction. All of that line item went to Tax payable (or some other liability account if you didn’t use the default setting). That is what corresponds to the zero balance under Net Purchases in the Tax Summary for the GST 15% on imports line. All of such a line item shows up under Tax on Purchases.
OK so understand that now thank you so do I tell my client that his total purchases are in fact 38,245.56
which is the 28,572.41 + 9,673.15. (Not the 958.65)
This whole thing came about because my client saw the total purchases of 39,204.21 on the summary
and said thats not right the purchases only came to 38,245.56.
And in NZ we have to put the total purchases GST inclusive in the return and then put the GST amount paid for customs so do I put the 39,204.21 or the 38,245.56.
Thanks Tut for you help I do understand the theory behind it now better
Neither of you is right. Your client’s total purchases without tax are the sum of the net purchases column. The client’s total purchases including tax is the sum of the total purchases column.
Oh no now I am confused again
but the GST paid to customs is in the total purchases amount.Which is the part thats confusing me
Sorry Tut I know I sound dumb but I just dont understand last year I muddled through it and have tried to understand it through out the year but could not
I really appreciate your patience in helping me understand .I have gone through all my textbooks and paper from uni and still dont get it
OK was just going through one of my books and found this
@Wornout, I don’t know the tax laws in your country. And I will not give you advice on how to complete your tax fling. I specifically know nothing about the calculation sheet that produces the figure for Box 13.
What I will tell you is that caption for Box 11 seems to describe the sum of the column labelled Total Purchases on the Tax Summary report, which on your first screen shot is $39,204.21.
Your $4,299.41 figure does not seem to belong as an input on your tax form, because that is Manager’s net tax liability for only one tax code. The tax form appears to calculate the net liability in the aggregate from the subtotals for all tax codes.
Thank you Tut. I did not expect you to tell me how to fill the form out because I know you are not conversant with NZ tax just as I am not with another country’s.
But your input has sure been insightful/helpful.
I do understand it better now.although I dont suppose I will ever get my head around the total purchases includes the customs GST amount.
On a brighter note I am looking forward to all the changes that are about to happen to manager and hopefully will include NZ with the one touch filing etc.One of the highlights of my month is reading and upgrading manager its in my calendar as a monthly occurrence
OK Tut because I was really starting to doubt my ability and was about to give up I kept asking . I emailed my inland revenue case manger as well as a chartered accountant and got this in reply.
Box 11 says “Total purchases and expenses(including GST) for which tax invoicing requirements have been met -excluding any imported goods” which means GST inclusive purchases less Imported goods so thats the 28,572.41 and in box 12 the tax on that is 3726.78 in box 13 which says "“Credit adjustments” which includes customs GST is the 958.65 then box 14 you add box 12 and 13 together which is 4685.43 then in box 15 you take the tax on purchases away from tax on sales which is 3340.76
So at the end of the workings the total purchases in box 11 is just the 28572.41.
So the finished GST form looks like this
But I really want to thank you Tut for helping me I did learn a few things on the way
I apologize, @Wornout. I misread the screen shot because it was so small. I read “including any imported goods.” [Emphasis added.] Time to get my eyes checked. With the correct reading of the form, all makes sense as per your final post.
Its very simple
The term “GST sales and purchases” relates to transactions where GST has been received or paid.
It has nothing to do with Accounting sales or purchases.
As examples
If you purchase an asset (a vehicle) for 10.000 + GST 10% (1000), then that is a GST Purchase of 11,000. The accounting purchase is 10,000.
Then your client needs to understand that the term “GST purchases” relates to the GST ACT and DOESN"T relate to accounting purchases. They are chalk and cheese.
Right this guy is a brickie he has no idea nor does he want to thats why he pays me. But anyway the matter is closed and I had my answer to my question all along just needed confidence in my ability:blush:
