how to implement GST/VAT splits?

[Andrew Greig]

On Fri, 2009-04-03 at 18:11 -0700, Andrew F. wrote:
> I am testing GnuCash to see if it us useful to do my small business accounting in Australia. Because we have a GST (= VAT) type of sales tax, purchases and sales usually have a tax component which should be split off to an asset/liability account rather than counting the entire amount against an income or expense account.
> 
> I have installed GnuCash 2.2.7 and can not figure out how to make this separation occur "automatically" when I record a purchase or sale.
> 
> I have used the Tax Table Editor to set up GSTsales and GSTpurchases taxes (both at 10%) but can not figure out how to get the system to use this information, or even what the Tax Table is for.
> 
> I have consulted the online documentation (which dates from 2006).
> 
> Can anyone help?
> 
> Andrew
> andrewf8 at yahoo.com

Hi Andrew,

(For the benefit of other readers, outside of Australia: ATO =
Australian Tax Office, and GST = Goods and Services Tax, similar to VAT
elsewhere)

I copied the set up in MYOB.  I created 2 GST accounts under Liabilities
- one is GST paid, the other is GST Collected, I set them up under a
place-holder account called "GST Payable to ATO" (note the presumption
of profit?). So the Parent account for "GST Payable to ATO" is
"Liabilities", and the Placeholder and Tax related check boxes are
checked.

In the two sub-accounts, only the Tax related checkbox is checked, and I
used the name in the description field as well (not really important).

Under Business>Tax Tables I have eliminated all the USA and other
national tax classes and created 3 Aussie ones: GST Collected, GST Paid,
and GST Free.

When editing these I select "Type" percent, "Value" 10.00 and then when
I create an invoice, I make sure that the Tax table is "GST Collected"
and for bills to me it should therefore be, "GST Paid".  The parent
account (the placeholder) will indicate the difference between the two
sub-accounts, and this will give you the figure you need to pay the ATO.

Now I have been very slack in clearing this account properly, but I
think I should have (from the start) written out the cheque/paid_by_EFT
to the ATO the amount shown in the placeholder account, crediting the
"GST Paid" sub-account and debiting the Cheque account in the split.

This should zero the Placeholder account.

Now anyone else should buy into this at this stage, because I have not
proven this last paragraph.  Disclaimer: IANAA, and I am still trying to
get my head around it.  I suspect it IS right, because then the amounts
I have collected on behalf of the ATO and the amounts I have paid to the
ATO are equal.

Please suck it and see.

Andrew Greig

Melbourne, Australia.

PS If you are using GnuCash under Linux, and would like a copy of the
ATO's software for Linux, called the Electronic Commerce Interface, I
would be happy to mail it to you on disc.  If you are running under
Windows, you can download it from the ATO website.

I was using the ATO Business Portal, but then I upgraded my Linux
system, and lost functionality.  I have had the ECI client from 2005, so
I loaded it, it works, and on my first use of it the ATO picked up that
it needed an upgrade and proceeded to install it.  The upgrade works,
and so now I can have the latest version for Linux (the one that does
not exist).  Note to Liz Dodd - yippee!