Sometimes invoices you receive from vendors such as the telephone company, cable company or freight forwarders will include sales tax totals without any indication of which items have incurred the taxes and which have not.
For example: You have received a telephone bill totaling $541.58. Although the bill shows is a subtotal of $488.24, a PST amount of $20.11 and a GST amount of $33.23, there is no way to determine which amounts were both GST & PST, or which amounts were GST only. Obviously, the automatic line-by-line tax allocation done by MoneyWorks is not going to useful.
To allocate the tax on this type of transaction: Create a payment as normal, entering the subtotal in the Net field, entering the T tax code (since I know that both GST & PST must be recorded for this transaction), and push tab:
Click the Down Arrow icon next to the tax total at the bottom of the entry screen. The Tax Override window will open:
Enter the actual tax amounts as specified on the invoice. In this case a $33.23 GST and $20.11 PST.
If the appropriate tax code isn’t displayed in the list, click the New icon to add it. Only base tax codes can be used (you cannot code to a composite one). And remove the unused taxes by using the Delete (Trash) icon.
If correct click Apply to apply the taxes.
Any tax will be stripped off the existing line(s) on the invoice, and a new line will be added for each of the taxes specified in the Tax Override screen. The tax codes on the existing lines will be changed to “*â€, so you will not be able to alter these tax amounts.
Since the sales tax (PST in this case) is normally treated as part of the cost of the item being purchased, if the Tax Override is used, MoneyWorks can no longer apportion the tax to each line of the transaction; instead all tax is apportioned to the general ledger code used in the first line of the invoice in this case account 7080 Communications.
Note: If using a product transaction, MoneyWorks will create a new product “~TAXâ€, and the tax lines will be allocated against this product. In the example below the supplier only charged a 2.5% GST tax rate on this product.
