4 Setting Up Australian Goods and Services Tax

This chapter contains the following topics:

4.1 Setting Up Tax Authorities for GST

You must create an address book record for the Australian Taxation Office (ATO). The search type is typically V (suppliers), but using this search type is not mandatory.

To create vouchers to remit outstanding tax to the ATO, you must set up the GL distribution and tax information in the supplier master record as:

  • Specify GST as the GL class.

  • Specify a default expense account.

  • Specify E (GST Free) for the Tax Explanation Code 2 field.

To claim a Goods and Services Tax (GST) refund from the ATO for net creditable inputs, you must set up the GL distribution and tax information in the customer master record as:

  • Specify GST as the GL class.

  • Specify an account number.

  • Specify E (GST Free) for the Tax Explanation Code field.

4.2 Setting Up Tax Rates and Areas for GST

Set up tax rates and areas for the tax rates that you commonly use in compliance with GST. At a minimum, set up a tax rate and area code for taxable supplies at 10 percent. Specify a GL offset that links to AAIs to identify the GST input, GST output, and GST adjustment accounts in the chart of accounts. The tax rate is 10.000.

4.3 Setting Up Tax Explanation Codes for GST

Tax Explanation codes control how GST is assessed and how it is distributed to the general ledger revenue and expense accounts. A code of V (value-added tax) is used for GST transactions (both taxable supplies, and zero-rated goods or services), and a code of E (value-added tax exempt) can be used for GST-free transactions. (Alternatively, you can set up a GSTFREE tax rate or area, or both.)

4.4 Setting Up Tax Rules for GST

Tax rules determine how the tax is calculated with respect to discounts and how variations in tax amounts are handled. Variations in tax amounts occur when rounding occurs (for example, on foreign currency purchase orders) or when the GST amount on the supplier tax invoice differs from the amount calculated in the software.

4.4.1 Accounts Receivable Rule

Set up the Accounts Receivable rule with these options:

  • Select the percent option as the method for determining tolerance.

  • Select the Tax on Gross Including Discount option.

  • Select the Discount on Gross Including Tax option.

  • Select the Sales Order Taxes at Order Level option.

4.4.2 Accounts Payable Rule

Set up the Accounts Payable rule with these options:

  • Select the Amt option as the method for determining tolerance, specifying 2.00 as the amount at which a warning is issued and 10.00 as the amount at which an error is issued.

  • Select the Tax on Gross Including Discount option.

  • Select the Discount on Gross Including Tax option.

4.4.3 General Accounting Rule

Set up the General Accounting rule by selecting percent as the method for determining tolerance.

See Also:

"Setting Up Tax Rules by Company" in the JD Edwards EnterpriseOne Applications Tax Processing Implementation Guide

4.5 Setting Up General Ledger Accounts for GST

Use the example in this table to set up general ledger accounts:

Business Unit Object Account Subsidiary Account Description Posting Edit Code Level of Detail
1 1600 . Goods and Services Tax N 5
1 1610 . GST Return Clearing . 6
1 1610 GSTADJ GST Tax Adjustments . 6
1 1610 GSTPURCH GST Taxes Input Credits M 6
1 1610 GSTSALES GST Taxes Output Debits M 6

Note the M posting edit code (machine-only postings). To allow for payments to the ATO and to allow manual journal adjustments, you must create additional accounts without the M posting edit code.

Reconcile the rolled-up net GST amount at level of detail 5 to the amounts that are reported on the Business Activity Statement.

The rolled-up balance is transferred to this GST payable account in the balance sheet:

Business Unit Object Account Subsidiary Account Description Posting Edit Code Level of Detail
1 4431 . GST Payable M 6

If the rolled-up balance indicates a net claim for GST credits, an AR invoice transfers the rolled-up net credit total to this GST Credits Receivable account in the balance sheet:

Business Unit Object Account Subsidiary Account Description Posting Edit Code Level of Detail
1 1240 . GST Recoverable M 6

4.6 Setting Up Automatic Accounting Instructions for GST

Set up these financial AAIs in connection with the recommended general ledger accounts:

4.6.1 GST Output (Sales)

This table displays the recommended values for the GST output (sales) AAI:

Item Number System Account Code
RTTXTX 03B 1.1610.GSTSALES

4.6.2 GST Input (Purchases and Vouchers)

This table displays the recommended values for the GST input (purchases and vouchers) AAI:

Item Number System Account Code
PTTXTX 04 1.1610.GSTPURCH

4.6.3 GST Input (GL Transactions)

This table displays the recommended values for the GST input (GL transactions) AAI:

Item Number System Account Code
GTTXTX 09 1.1610.GSTPURCH

4.6.4 Accounts Payable

This table displays the recommended values for the AAI for a voucher offset to facilitate GST clearing using payments:

Item Number System Account Code
PCGST 04 1.1610.GSTPURCH

4.6.5 Accounts Receivable

This table displays the recommended values for the AAI for a voucher offset to facilitate GST clearing using receipts:

Item Number System Account Code
RCGST 03B 1.1240

Note:

Your account numbers might be different if you have set up the chart of accounts differently.