Purpose
This function is used to set and change the “tax” settings and import duty details used by the system. “Tax” is a generic term used to describe whatever local tax needs to be accounted for. The system has been used extensively in countries with taxes like GST, VAT and Sales Tax. The ability to perform global updates on tax codes is also a function included here so when there is a change of tax code by your Government you can make the change without having to make adjustments to the hundreds/thousands of products and orders you have in the system.
Data Input
Step 1 – Tax Details
Tax Description
Enter up to ten characters to describe the type of tax being charged using the tax codes e.g. sales tax, GST, VAT. This description will be used on input screens, display functions and reports.
Creditors Tax Processing
Select whether the Online Advantage Accounts Payable (AP) module needs to perform tax processing during the entry of creditors invoices and credit notes. This applies to taxes such as a Goods and Services Tax (GST) or Value Added Tax (VAT) where tax applies to a range of items across both Accounts Receivable and Accounts Payable and thus needs to be tracked and reported on in both areas. If “No” is selected, then the system will not attempt to calculate a tax amount during AP transaction processing. Having this option off will also mean that the tax details entry will not be visible in the Accounts Payable input routines.
Invoice Print Code
NOTE: This function is here for legacy purposes only – it is not in use in recent OA system but available to clients using versions of OA that are now over 10 years old.
This option allows the older terminal emulation version of OA to switch a “print setting” on/off so that invoices print and credit notes show tax on the document in one of two ways:
1. Line item tax – this will see all the standard Online display routines and invoice/credit note prints show the tax component against each line item on a document
2. Total tax – this informs Online Advantage to show the relevant tax as one total at the bottom of the page before the invoice or credit note total for the document and thus only show the one amount for sales tax.
In this instance, only the sales tax code or percentage is shown against the line items and not the dollar value for tax.
Round Tax Calculation Down
Select whether you wish to round down the tax calculation. Based on this setting the system will round up or round down, to the nearest 0.05, any “cash” transaction processed through the system in “counter” sales mode. In other words, if payment is being made at a counter situation during Sales Order Entry (SOE) or Point Of Sale (POS) and the transaction amount including tax does not calculate to an even “0.05 ” amount OA will automatically round the transaction amount up or down to the nearest whole amount by adding a transaction line for “rounding” to the Invoice/Credit Note being raised. Note: This only applies to “cash” transactions – all other payment methods are assumed to support exact amounts.
Exempt items
Enter any code up to 2 characters which you wish to use for products with no tax applicable. It is common for people to use the code “EX” for the exempt items, but any code you prefer can be used here. Once setup, products can then be marked with this tax code to nominate to the system that tax should not be charged for that item. All individual transaction for products that are marked as exempt are stored with this exemption code so that all records are historically correct should an item move from being exempt from tax to having tax added in some way in the future.
Exempt number Quoted
Enter any code up to 2 characters which you wish to use when customers quote a tax certificate number on their orders. As with the “Exempt” tax code above, it is mandatory that a code is set so that the system can record the details of any “tax” free transactions where a customer has provided/quoted a reference that allows them to be excluded from Government taxes. There are many reasons why a customer might be able to purchase free of additional taxes, for instance, they may be a “NGO”, a “Not for Profit” Organisation (like a Charity), perhaps they have special R&D certification, or be a Primary Producer who is specifically excluded from paying additional taxes. Perhaps the most common reason is that the customer is a “Foreign” company and so the goods/services are being exported offshore and do not attract local taxes. Regardless of the reason, all transactions recorded that are tax free because an exemption has been quoted by the customer are flagged with the “exempt tax code” you enter in this setting. This makes for easier Tax reporting and tax reconciliation.
Tax Code
This is where a list of the tax codes can be created for use in the system. You can enter any alphanumeric character as a tax code. It can be one or two characters long for the tax code.
The tax code is not important in itself other than it must be unique and must be used consistently for the tax % rate allocated throughout the system. It is quite common for people to try to use a code that is the the same as the tax rate i.e. 10 = 10%, and 12=12%. However this tends to become unworkable when you have tax rates like 12.5%. So just remember that the code itself is not important. It is only important that you use the code consistently.
All existing Tax codes and rates are displayed in a list. You may select an existing code from the list to edit the details. Click the delete icon in the list to delete a tax code. Once these changes are complete and you select ‘Submit’ the system will check for the existence of tax codes to be deleted on the Product Master. If a product is allocated a tax code that you are attempting to delete the system will not allow the deletion of that code. You will need to remove that code from the relevant Product and allocate another tax code to that Product (or Products) in order for you to be able to delete the tax code from this list.
To set up a new tax code, enter code and rate and click Add. The new tax details is added to the list.
Tax codes allow Online Advantage to produce a tax summary and tax reconciliation report at the end of every month showing what was charged for every tax code i.e. every rate and performing a calculation on what should have been charged in tax thus assisting in reconciling any differences.
NOTE: It is strongly recommended that you never re-use a tax code for a different rate. In other words you should not “change” the rate on a tax code once you have started invoicing and transacting with that code. It is cleaner of you simply create a new code with a new rate on the list where required. This way the history stored in the system for old transactions is clearer and easier to audit if required in future. We have known customers who have had a tax audit performed more than 6 years after the transactions so it does help to keep clean and clear records. If a new tax rate is required in the system we recommend you create a new tax code and then use the “Change Tax Code” available in this facility.
Rate
Enter the tax rate, it can be entered to one or two decimal places and does not need to be in any ascending or descending order on the list. The “rate” is the tax percentage that will be charged for each item/product setup on the system that has the corresponding tax code against it.
Default Tax Code
Select the tax code that is most frequently used.
This code will be the default tax code used during Product Master entry, and in Accounts payable functions as the default tax calculated by the system if the AP tax processing is turned on.
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Step 2 – Duty Details
All existing Duty codes and rates are displayed in list. You may select an existing code from the list to edit the details. Click the delete icon in the list to delete a duty code. Once these changes are complete and you select ‘Submit’ the system will check for the existence of duty codes to be deleted on the Product Master. If a product is allocated a duty code that you are attempting to delete the system will not allow the deletion of that code. You will need to remove that code from the relevant Product(s) in order for you to be able to delete the duty code from this list.
To set up a new duty code, enter code and rate and click Add. The new Duty details is added to the list.
Duty codes are used in the Inventory and Purchasing modules of Online Advantage. Products can be given a default Duty code that will cause the system to calculate a Duty amount for that item based on the value being received from “Foreign” supplier and using the duty rate allocated to the code. It should be noted that this duty calculation can be overridden on an item by item basis during the receipt and costing of a foreign shipment being received into the system.
Duty Code
Enter any code up to two characters which you wish to use for products with this duty rate.
This duty code is then used as a tag on the Product Master file to nominate that this product attracts a duty when being purchased from a foreign supplier.
Rate
Enter the duty rate up to two decimal places which is the rate used to calculate the duty value for products flagged with the corresponding duty code.
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Step 3 – Change Tax Code
This function allows the global updating of the Product Master file when new tax codes or changes to tax rates are legislated. If this occurs, first set up the new tax code and rate in the Tax Code Maintenance area. Then, move all products on the system from an old code to a new code and thus a new rate without having to manually change each product.
WARNING :No processing should take place whilst you are updating Tax Details.
Update Outstanding Order/Quote Tax Details
Select whether you wish to update the outstanding order or quote tax details. If you select this option, all orders and quotes already entered in the system will have the old tax code replaced with the new code and the value of all quotes/orders will be recalculated to reflect the new tax rates you have setup. This obviously saves you having to make individual adjustments to every quote and order on the system with products that are using the “old” tax codes.
Old Code
Select an existing old tax code, that is to be replaced on the Product Master file with a new tax code.
New Code
Select the new tax code, that will be used. All products on the Product Master file that have the old tax code entered will be changed to the new tax code as part of this global update. This obviously saves you having to make individual adjustments to every product that is set to use the “old” tax code.
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