Tax code maintenance allows maintenance of tax rate, general ledger account, whether or not the code is GST/VAT or withholding tax and whether the calculation is based on gross or net value of the invoice.
Add a new tax code
- In the menu, expand Base Modules > Accounts Payable > Maintenance and double-click AP Tax Code Maintenance. APM170 Tax Code Maintenance selection panel appears.
- Click Add.
| Field | Description |
| Company | A Company number is allocated to associate the creditor with a specific company. The default company number is taken from TMSAP/CONO and can be overridden. A Payment Cycle is specified by Company. The Company number can also default from the original transaction as in the case of Already Paid Invoices. |
| Tax code |
A Tax code is the user defined code to identify a tax rate applicable for a Tax category. Multiple tax codes can be defined for a Tax category to cater for various conditions that may arise. Whether this field displays in the Invoice/Credit Note Entry GL Dissection panel depends on the default settings in TMSAP/TAX-MODE. This default can be overridden. To display this field when it is not the default, the function can be selected. The default Tax code displays in the T column and comes from the Tax category code in the Creditor masterfile. The Tax code can be overridden at this point to cater for portions of an invoice that attract a rate that differs from the default rate. This caters for the differentiation between taxable items and non taxable items. The header tax value can then be overridden if necessary. Also the line detail tax values can be amended to cater for calculated rounding differences. If the system displays the message Invalid tax code check the setup in TMSAP/TAX-ACT to ensure the Creditor type is valid for the Tax code selected. |
| Description | A brief description is given of what the tax code represents. |
| Withholding tax |
This field on Invoice/Credit Note Entry automatically calculates the amount of tax to be withheld based on the tax category entered on the header and may be overridden. An overseas creditor may attract tax due to their local government arrangements, for example foreign creditor royalties. A Tax category is established accordingly. If the creditor has no ABN and is therefore not registered to collect GST, Withholding tax may be applicable. In this case a Pay As You Go (PAYG), Withholding tax will apply unless the creditor is exempt. This tax is at a high rate (currently 48.5%) and is withheld from payment so the creditor would generally need to substantiate a claim on the Government Tax Office to recover his funds. This Withholding tax is posted separately in the General Ledger and is processed differently. Instead of the GST being added to the invoice value, the Withholding tax is subtracted from the invoice value prior to payment. |
| Tax break | Specify the tax break as No Break, Absolute or as Differential. |
| Tax rate | This is the tax amount calculated according to the rate selected. Whether this field is the default on the Invoice/Credit Note Entry dissection panel depends on the settings in TMSAP/TAX-MODE. To display this field when it is not the default, the function can be selected. |
| Start of year | Specify a value for the start of year if required. |
| G/L Tax Account | When creating a Tax code the primary General Ledger account to which the input tax component must be posted is nominated. GST, Withholding tax and Deferred tax amounts are posted to the General Ledger Account specified here. In the case of a creditor that has an ABN and is registered to collect tax, this is the only General Ledger account needed. |
| Tax on | Specify from the list if the new tax code is to be used on earnings or payments. |
| G/L provisional | Specify an appropriate G/L provisional account for the new tax code. |
- Enter the above information, as necessary.
- Click OK to save the new tax code definition.
