Supplier Purchase Issue with tax exclusive items

1

Hi,

The issue I have is that my supplier displays unit prices as tax exclusive and then adds GST to the subtotal. When I submit these as a purchase invoice , I can to do the following:

  • Deselect “Amounts are Tax Inclusive”
  • Add GST 10% to each line item

The issue I have after this is that now the GST ends up in tax payable but this is not a liability as the supplier is collecting and paying the GST. So I don’t think this is the correct approach.

I then found here LINK that I could simply add a discount of -10% on the invoice instead to have the amounts amended to tax inclusive without these becoming liabilities.

Now the problem I’m having with this solution is that for one or two items, the total is not coming to the correct amount. An example is where I have bought large volumes of low cost units. e.g. 112 units at $1.36 total price. Manager.io doesn’t allow me to enter the total price and so I have to backwards calculate the unit price and this becomes a very long decimal number. I think because of this, rounding is now the issue.

Please can you help me with this? The issue above affects nearly every invoice I receive from my supplier and now I’m stuck. I’ve read the guide on handling discrepancies and this doesn’t help with my situation.

Thanks

2

OK there are several issues here but you need to provide clarification on your GST registered status and / or the local tax regulation + are you using Inventory Item or not. Assuming usual GST circumstances then the response would be as follows:

Are you registered for GST, if yes then 1 & 2a or if no then 2b

  1. If you are needing to continual do this “Deselect - Amounts are tax inclusive”, then you have the default situation set incorrectly. If you “untick” the - Amounts are tax inclusive - and click “set default”, then all Purchase Invoices will be processed as “tax exclusive”

2a) can’t you can claim the GST paid to suppliers back against the GST you charge your Customers. Therefore the GST you charge Customers gets credited to the Liabilities - Tax Payable account and the GST you paid to the Suppliers gets debited to the Liabilities - Tax Payable account, resulting in you paying the nett as your GST obligations.

2b) then under Setting - Tax Codes, no tax code should be selected. Just enter the amounts directly off the invoice but now use the “Amounts are tax inclusive” ticked