Why can't a levy I pay which is subtracted from the total of a sales invoice be tax coded with NCF

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Anthony Beck
Anthony Beck Member Posts: 4 ✭
in Accounts Hosted

Why can't a levy which is subtracted by the business I am invoicing for the sale of animals to an abattoir be correctly Tax Coded eg NCG and not a negative FRE

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  • Acctd4
    Acctd4 Accredited Partner Posts: 3,408 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
    edited March 2022 Answer ✓
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    @Anthony Beck This is because Reckon Accounts/Hosted relies on separate income/sales & purchase/expense forms along with their respective tax codes.

    If entered the way you describe, this will actually understate the income & skew your expenses.

    Best practice in this scenario is using a Clearing account. This is a “dummy” Bank-type account for the purpose of receiving/paying transactions that are combined:

    * Tax Invoice Receive Payment (or Sales Receipt) - for the FULL sale amount - should be deposited to the Clearing account.

    * You then enter a Write Chq(s) OUT of said Clearing account for your fee (& any other) payment(s).

    This should then leave the correct remaining net balance in the Clearing account which you can then either Transfer or Write Chq from, posting to your actual bank account as per the amount you actually receive 😊

    The above method ensures:

    1. Full Sale/Income (along with full Expenses) are correctly recorded
    2. Sale/Purchase Tax Codes are correctly used
    3. Your BAS Reports will generate the above figures accurately

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner (AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

    * Regd BAS Agent (No: 92314 015)* ICB-Certified Bookkeeper* Snr Seasonal Tax Consultant since 2003 *

    Accounted 4 Bookkeeping Services

    Ballajura, WA

    shaz@accounted4.com.au

    https://accounted4.com.au

    (NB: Please give my post a Like or mark as Accepted Answer if I have been able to resolve your query as this helps others when seeking solutions!)

Answers

  • Anthony Beck
    Anthony Beck Member Posts: 4 ✭
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    Whoops, I meant correctly Tax Coded NCF and not a negative FRE payment

  • Kris_Williams
    Kris_Williams Member Posts: 3,293 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert
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    Yes I know exactly what you mean and have run into this problem many times, it says something about the way the tax code has been setup. I couldn’t be bothered researching so just do a journal or credit note. But frustrating for sure

  • Anthony Beck
    Anthony Beck Member Posts: 4 ✭
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    This will happen more often in my business. So I went to the trouble of creating the RCTI Bank account. I then created the item in my case "Lamb levy" "discount" for type linked to the RCTI account with no Tax code. Created the Tax Invoice to my customer with a subtotal in the line above "Lamb Levy" discount so that anyone could easily see the deducted amount of levy below it. As per the above best answer above in comments. You can then leave it until you receive the payment at which time you can write a cheque from the RCTI account with the levy amount correctly tax coded which in my case was NCF. I have done a Tax code Summary report for the period of the transactions and everything was correctly recorded. GST for the full sale amount and the NCF expense for levy concerned. The customer also gets an invoice which looks right.

  • Anthony Beck
    Anthony Beck Member Posts: 4 ✭
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    Thank you all for helping out

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