Perhaps, but that is for Financial Reporting. But Financial Reporting and Tax (GST & VAT) Reporting are not the same thing.
The previous model did not fall apart While the credit may not have been a financial Sale, it is always a GST Sale as the credit implies that GST is being received. Vice versa for debits.
The definition of a GST Sale or GST Purchase is based upon, is the GST being received or being paid. It has nothing to do with the financial definition of the sale or the purchase.
Manager’s previous model had the Tax (GST/VAT) reporting absolutely 100% correct in accordance with any Tax Authority’s requirements and that is the only standard which Manager should be meeting. Instead it appears that Manager is currently attempting to have the Tax reporting in accordance with particular User interruptions, and that is why Manager is now getting into such a mess. Other accounting software which use dual primary codes instead of Manager’s single primary code never have this conflict as they don’t attempt to impose a particular tax code outcome on to a User’s transaction.
This may be cute (but wrong) for P&L accounts but it could never work for Balance Sheet accounts. Take for example this set of circumstances:
An organisation Receives a Grant for a particular project. The Funds as received are allocated into a BS > Liability account called Funds held in Trust. Any expenditure on the project are also allocated to this same account. So what you have is a single financial account being used, however for GST Reporting purposes the various transactions would be reported separately under GST Sales (for the GST received transactions) and GST Purchases (for the GST paid transactions).
Exactly, and that is why this solution should never get on to any drawing board.
No you are not, in fact, you are one of the few forum members who are seeing this issue with clarity.
What you are suggesting is the exact same process that other accounting software uses except they use separate tax codes instead of your S and P fields.
Right on the money and that matches @lubos earlier comment - “Other accounting systems are simply addressing this issue by using separate tax codes for sales and separate ones for purchases.”.
But there are no exemptions to the rule. Where a transaction implies that VAT is being received then it is a VAT Sale. For example, VAT being received can’t be a VAT Purchase and vice versa.
Sorry but the essence of this statement is the root cause of the problem on this forum. THERE ARE NO GUESSES INVOLVED. The legislation provides very simplistic and basic solutions. Tax reporting is based on the Taxes being received and the Taxes being paid. Tax reporting has nothing to do with the allocation of the transaction within financial reporting.
Why reinvent the wheel as your suggestion is EXACTLY how the previous Manager model (every credit is sale, every debit is purchase) worked. Therefore there is no need for an optional line item specification, we just need to return to that previous model.
And that could be the end result unless Manager Users can educated into the fact that the Worksheet is only a draft of the Tax Return, and if Users require a variation to that draft, then they have the complete freedom to make their amendments before submitting their actual Tax Return.