[GNC] Recording Tax Correctly

Christopher Lam christopher.lck at gmail.com
Sun Aug 16 06:00:03 EDT 2020


Hi Omer, my approach is:

   - VAT:Input VAT - an ASSET account
   - VAT:Output VAT- a LIABILITY account
   - VAT:VAT Return - an ASSET or LIABILITY account

and run the "Income & GST Statement" periodically, posting the govt returns
as follows:
Dr VAT:VAT Return
Cr Bank

HTH, C

On Sun, 16 Aug 2020 at 07:55, Omer Hayat <omer.hayat at outlook.com> wrote:

> Hi.
> We have a 5% VAT charged on all bills and invoices. To the government, we
> pay the difference.
> I have setup an 'Input VAT(paid to Vendor)' and 'Output VAT(received from
> Customers)' accounts under Liabilities, and set them up. These are
> recording the VAT paid & received from Bills/Invoices correctly. The Input
> VAT account has negative values, and output VAT has positive values. We are
> supposed to pay the difference of these.
> For example:
>
> VAT paid to Vendor
> (50.00)
> VAT received from Customer      75.00
> FINAL VAT PAYABLE TO GOVT       25.00
>
> Keeping the above example, I would like to pass one entry, and pay off the
> difference amount.
> Example:
> DR Final Payable to Govt
> CR Bank
> But, how can I pass the Debit entry? Should I create a 'Tax' placeholder
> account and pass it to that? But then the individual Input & Output VAT
> accounts might have a balance.
>
> Please advise.
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