[GNC] withholding tax (Liz Dodd)

Maf. King maf at chilwell.net
Fri Oct 2 03:09:35 EDT 2020


Hi Paul,

A possible way to deal with this is to process the full payment to your bank 
account, then go an manually split the witholding portion out of the 
transaction as it appears in the bank account.

so step 1. process payment for the full £100

step 2. Go to the bank account, edit the transaction.  Reduce the split into 
the bank account to £80 and allocate the £20 to the WHT account.

(step 3 - check your work to see if it all makes sense for tax-return time!)

regards,
Maf.



On Friday, 2 October 2020 05:18:43 BST Paul W via gnucash-user wrote:
>  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.


-- 
Maf. King
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