Why won’t Phoenix Let Me Change the GST Amount Directly in Transactions?
In Australia, the GST rate for taxable items is only ever 10%, never anything else. For taxable items, Phoenix automatically calculates the correct GST amount, and does not allow the GST amount to be changed from the correct 10% amount. This policy gives the following advantages:
1.Easy entry of the GST Calculation Sheet figures for the BAS;
2.Solid GST data integrity;
3.The easiest verification in the event of a tax audit;
4.Assistance with identifying GST charging errors made by suppliers.
The GST Calculation Sheet of the BAS Enforces 1/11th of the Total
The GST Calculation Sheet of the BAS requires that the amounts (including GST) of all taxable items be totalled, and requires that the GST is then calculated as 1/11th of this. It also requires that GST Free and Input Taxed amounts be identified and totalled. Phoenix ensures that this is done.
Solid Protection Against Incorrect Claims
By maintaining a strict 10% relationship between the net amount of a taxable entry, and the GST amount recorded for the entry, Phoenix provides you with solid protection against inadvertent over or under claiming of GST credits or liabilities for taxable items. If the GST amount of a taxable item can be different to 10% then the GST amount cannot be checked against the item amount, and the software cannot easily warn of errors in GST amounts caused either by user entry mistakes or computer database corruption.
Easy Auditing
With Phoenix, proof of GST claims is clearly documented for a tax audit since each Phoenix transaction shows the “true story”. The alternative of allowing direct entry of a GST amount which is not 1/11th of the gross item amount would require the software to use the “GST derived from accounts” option for completing the GST section of the BAS. This method results in much more complicated auditing of GST records, and the correctness of GST amounts for a transaction cannot be verified without reference to the original invoices.
What do I do with left over cents in the GST Control Account?
The Phoenix BAS Calculation Sheet report shows the GST calculations including cents. When you transfer the “G code” amounts to the BAS, you transfer just the whole dollar amounts and ignore the cents.
When you subsequently pay the GST owing, or receive the GST refund, only the whole dollar amount is paid. This leaves the left-over cents in the GST Control account.
So what do the left-over cents in the GST Control account mean?
The left-over cents represent either GST you have collected but have not had to forward on to the government, or GST you have paid but have not been able to claim. This is part of the rounding problems that occurs with GST. This left-over amount only affects the asset or liability you see in the net worth report. It has no affect on the next GST Return.
What To Do
To remove the left over cents in the GST Control account, Phoenix cannot just change the GST Control account balance, or round it, since the Trial Balance would no longer balance. Instead, you need to make a direct transaction entry in the GST control account and allocate the amount either to an expense category (GST paid but which could not be claimed) or an income category (GST collected but which did not have to be paid).
The alternative, and probably a good way to start, is to leave the cents in the GST Control account and see how it goes after a number of GST returns - some returns may increase the total left-over, some may bring it back closer to 0. That is, over time, it may just fluctuate around the $0.00. If necessary, it could then be brought back to $0.00 at the end of each financial year with just one transaction as described above.
Why is the GST Credits and GST Payable different on the Screen to the figures on the GST Calculation Sheet?
This difference is due to transactions that have been entered with both Incomes and Expenses in the one transaction. The screen calculation on the GST Return looks at total invoice value. The calculation report looks at each dissection in each transaction. So if an invoice has a total invoice value of $9000 but the dissections showed the income being $10000 and expenses were $1000 then the screen would show income as $9000 with no expenses and the report would show an income of $10000 with expenses of $1000.
See also: Australian GST Set-up or New Zealand GST Set-up
