[GNC] withholding tax (Liz Dodd)

[Paul W]

 Stan,

I see what you are saying. Practically I think I need to process the invoice payment twice, first part payment (80) to Accounts Receivable then another payment (20) to Assets: WHT. But I don't seem to have this ability in gnucash because when I process an invoice payment in the 'post to' box only has Assets: Accounts Receivable as an option in the pull down menu. Help!

Paul


On 2020-10-01 19:14, Paul W via gnucash-user wrote:
> Foreign Government A keeps this money and My Government B will credit this amount against my corporation tax liability.
>
> My invoice is for the full amount, £100.
>
> Usually (without WHT) when the invoice is paid the full amount is
> sent to my Accounts Receivable. In this case I think the way to do it
> is for gnucash to send £100 to Accounts Receivable then £80 will go
> from here to my Asset: Bank Account and £20 to Asset: WHT. How do I
> achieve this in gnucash?

Just to be clear, the answer to any question like this is always, "Think
of GnuCash as a pen-and-ink ledger. First determine what entries you
need to make, to cover your own accounting and tax needs. Once you know
that, you can make those entries in GnuCash."


> Do you agree this is the way to do it?


I don't think so. Since you will collect 80 pounds not 100, the amount
in receivables should, I think, be 80 pounds not 100. The 20 pounds is
an asset, but it is a prepaid tax expense and not a receivable.

Debit: Assets: Receivable from {customer} 80
Debit: Assets: Tax prepaid to {Foreign Government} 20
Credit: Income: Sales 100

Then at the end of the year you make an adjusting entry:
Debit: Liabilities: Tax payable to {My Government) {total for the year}
Credit: Assets: Tax prepaid to {Foreign Government} {same amount}

That lets you track the amounts invoice by invoice or by annual totals.
For strictly accounting purposes, that is what I would do. However, your
country may mandate doing it in a particular way, so you may want to get
local advice on that point. There's no need to bring GnuCash into that
discussion; just ask how debits and credits should be recorded.

-- 
Regards,
Stan Brown
Tehachapi, CA, USA
https://BrownMath.com
https://OakRoadSystems.com