When taxes don't align

I’ve been trying to work my way around this for the last half hour or more, but the GST indicated on their invoice doesn’t correlate to what manager calculates.

For the second time in a few weeks, and for the second only ever tax inclusive invoice I’ve entered, I can’t get the numbers even to closely align (they are more than half a percent out).

I realise some parts of the invoice are subject to GST, some aren’t (tax on a tax), but I’m not guessing some are inclusive or GST and some are exclusive, but no matter how I enter the following information, I can’t get it closer than a whole dollar out (well, $0.99) which puts the total of the invoice out.

(anyone is welcome to try and get these numbers to align—I’ve given up)

I’d love a way to enter a custom gst amount for an invoice. Even if I treat it as a line item by itself. eg, treat each line as GST exempt or free and then a GST amount as 100% tax.

How could I best do this?

and no sooner as I posted this, I worked it out :confused:

Notwithstanding that I found the solution, is there a way to better do this than to itemise the invoice as I have done?

I would much prefer to account for the whole lot as an invoice amount plus a custom GST rate (as a dollar amount and not a percentage), therefore just entering:

INSURANCE: 1784.91
GST: 163.67

Can I do this I do I really have to itemise each of them? (I was planning on putting EVERYTHING under operational expenses/insurance (including the stamp duty which is a cost component of the insurance) and not breaking out the stamp duty as it’s own line item).

It is always a good practise to process a purchase invoice in a way which reflects the actual invoice then everything is more traceable if required in the future however you could group all the GST items together then just leave the non GST items as separate entries. Would strongly recommend against creating custom GST rates as this is only going to cause problems with rounding and traceability.

Thanks @Brucanna, I didn’t actually mean custom rates as in working out a new percentage, I just meant to be able to apply a custom GST value that can be sent to the Liabilities | Tax Payable part of the balance sheet for that invoice.

Ideally, where you enter the invoice details, there would be a GST pre-filled field with the correct value and you could change if required. Even if you had to enable a checkbox or some other “security” feature to enable it.

Maybe I’m just unlucky, but this is the second invoice where GST wasn’t 1/11 of the total price and although this one was easier to work out, the one from a few weeks ago never aligned. (BTW, I mentioned it to them a week or so later. The Mrs got some more stuff there today and now EVERYTHING has NO GST :astonished:)

I do appreciate what you say about breaking it down but in a large list of things where it’s not identifiable what’s GST and what’s not (and I’m aware they SHOULD be indicating this), it would be easier if you could just add a custom GST amount because in reality it’s the fact you’ve paid $X GST for BAS that we’re worried about, not whether X=Y*0.1 or not. I’m not saying it’s not important, it would be nice if you didn’t have to break an invoice down if you didn’t have to.

Just in the case of stupid or odd invoices, I’ll have to get out a calculator and work out and manually work out what’s what. It’s an extra 30-60 seconds that just hurts my brain. :smiley:

Instead of focusing on the shortcuts you should see it as an opportunity to validate the GST being charged. Just blindly accepting an invoice as being correct by being able to amend the GST amount to suit is not good administration practise. Also, you can get to know where GST is not applicable - such as Stamp Duty

@Brucanna I don’t really see it as focusing on shortcuts, but more of having our tax credits and debits marry with the supplier’s without having to manually make these calculations myself and creating two line items.

After quite a bit of Googling on it last night it does seem that it is a common theme amongst different packages. Some allow for a manual GST amount to be entered whilst others seem to create a work around of having two line items to make it work. One with GST and one without. It would appear (to this novice) that is more of the shortcut and prone to error.

The crux of it is:

My insurance costs me X, the GST I pay is not X/11 (or X/10 if exclusive). I should be able to accept the supplier has it correct and enter it that way.

Shouldn’t manager be able to cater for that instead of me having to manually create two line items and make calculations for each and possibly make a mistake?

Personally, no. From experience - relying or accepting that suppliers always get it right is not good practice.
Take your own experience “the one from a few weeks ago never aligned. (BTW, I mentioned it to them a week or so later. The Mrs got some more stuff there today and now EVERYTHING has NO GST”

Three problems with this approach.

If GST can be manually entered, then mistakes will creep in and your GST will not be 10% on taxable purchases. This is why Manager insists on doing it the “hard” way. It saves time in the end because you don’t have to scramble at the end of tax period looking through all your transactions to hunt mistakes. Your GST amount will be always 1/11th of your GST-inclusive sales or purchases.

The second problem. In Australia when you are reporting GST on purchases, you need to separate capital and non-capital purchases. Entering GST amount is not enough. The accounting system needs to know whether GST relates to capital or non-capital purchase. And the way Manager determines this is by looking at which account the expense is related to.

The third problem. Before you lodge your GST figures, you really want to scan through Tax Audit report. This report shows on which accounts GST has been applied. It quickly allows you to see if GST was incorrectly applied on wrong sales or purchases or if GST was not applied where it should.

@Brucanna, Using that example, this is the only supplier of it’s kind within an hours drive of where I live. They’re not going to change their invoicing practices and how they calculate GST because I say so. This is a shop that has been running in my area for longer than I’ve been living here. I can only work with the information I’ve been given.

@lubos (I know this post was specifically related to insurance, but my previous was in relation to groceries). We are (getting) in (to) the fast food business, where grocery items can be GST free or have GST applied. At this point, I really don’t have the intention of cataloguing each and every item and/or manually going through and adding up all the items that are GST exempt and then all the ones that have GST applied. It would be MUCH simpler if it could be done a “softer” :slight_smile: way. I would have thought the manual calculation workaround would be more error prone.

Given I am the novice and you guys know considerably more than I in this regard, I will err on the side of breaking it up myself.

I did just find a good (but aged) post about it in another platform that suggested to have two separate accounts for each of the line items “Food items (GST FREE)” and “Food items (NO GST)”, which would also allow for the tax code to be automagically applied to the line item itself and would make the tax audit “neater”.

Thanks for the discussion.