Zone Relevance: AU (Australia)
One or more items in the invoice are GST Free
If an invoice contains items that are GST-free it can result in an Invoice where the GST amount isn’t exactly 10% of the total. You can enter these transactions as an Invoice with two separate line items - one with a GST tax code and one with a GST-free tax code. The GST will only be calculated on the first item for which you selected the GST tax code.Some common examples of transactions where the total of services provided on a tax invoice may not have GST of exactly 10%:
- Taxi fares or Cabcharge
- Insurance premiums
- Data/Information searching services
- Communications
- Freight
- Purchases where food is a part of the bill e.g. kitchen supplies for the office
You are being charged the GST component of a plan or contract upfront
Some service providers do this in Australia when charging for plans and contracts that you are locked into. As an example you can create a GST only amount with 2 line items in an Purchase or Sale:
- + $120.00 for say 12 months TAX/VAT/GST included
- - $109.09 for say 11 months TAX/VAT/GST free
This will create a transaction for a total amount of $10.91 all of which is GST (being the tax for a full 12 months). There are many variations on this theme so you will need to adjust accordingly. You may also need to add extra line items for other items in your invoice.
NOTE: Future payments may need to exclude the tax if it is being paid upfront.
FAQ’s
None of these examples fit my situation?
Unfortunately we aren’t Advisors so it’s hard to provide specific examples outside of these general situations we commonly see or have reported to us. Let us know if you have any to add to the list.
For more information you should try your Advisor or the see the ATO website.
