Purchase from overseas

  • 1
  • Question
  • Updated 3 days ago
I'm a bookkeeping beginner, having a question regarding purchase from overseas.
I got an invoice from a client. He bought some stocks from overseas. Under the "description" of that invoice, there are 4 items, which are,

Customs GST                                               Exempt Rated        $2671.43
Customs Duty                                               Exempt Rated        $1230.49
Customs Compile Fee                                  Exempt Rated        $185
Customs Clearance  + CMR + Handling            10% = $25        $250

                                                                      Subtotal                 $4336.92
                                                                      Add GST               $25
                                                                      Total AUD              $4361.92

The recording on Reckon is,

Stock - with GST                           $29385.73
Custom Fees - No GST                $1415.49
Custom Fees - with GST              $275
Stock - no GST                            -$26714.30
The net amount of above recording comes to $4361.92, which is the same as the Total AUD on the invoice.

My questions are,

1. what are those figures under the description of the invoice standing for. Are they tax amount or the value of goods or services? why do I need to multiply those figures by 11 entering on Reckon.

2. Why is the figure for Stock - no GST negative (-$26714.30)? what's that negative figure meaning?  I feel really confused.

Hope someone one here can help me. Cheers.
Photo of Dylan

Dylan

  • 70 Points

Posted 3 weeks ago

  • 1

Hi Dylan

These overseas ones can be a bit of a minefield as they involve multiple steps...!

 

Assuming there is no 3rd party import agent involved, there are 2 sets of transactions (3 if there is) that the Client needs to consider:

 

Overseas Supplier Bill/Cheque

  • The actual purchase of the Stock from the overseas Supplier should have already been entered previously (with no tax code)

  

Customs (Supplier) Bill/Cheque

 

  • The “GST” amount that the Client can claim is based on the taxable value of the goods as determined by Customs – in this case being $ 2,671.43. 

 

  • It is 'grossed up' (multiplied by 11) in order to calculate this GST amount as 10% HOWEVER, you can also just enter the net figure - which is my preference - based on that GST portion:

 

Note: In Reckon Accounts, you can tick/untick the checkbox at the bottom of bills & cheques called “Amounts include tax” depending on whether you want to enter/display the NET amount (& have RA calculate an additional 10% for the GST component) or the GROSS amount (where RA will determine 10% OUT OF the amount you enter).  The GST amount is exactly the same either way.

 

Eg

 

(Checkbox unticked)

                                                 Net Amt           Tax Amt

Stock                    NCG       $ 26,714.30         $ 2,671.43

 

OR

 

(Checkbox ticked)

                                               Gross Amt         Tax Amt

Stock                    NCG       $ 29,385.73         $ 2,671.43



 

  • The reason for the negative entry is to remove the Net amount whilst still retaining the GST component.

Personally, I think entering the Net amount is much simpler as it’s the Net amount that you need to remove so visually, it makes a lot more sense:

 

                                                 Net Amt           Tax Amt

Stock                    NCG       $ 26,714.30        $ 2,671.43

Stock                                   -$ 26,714.30

 

(The above cancels out that $ 26,714.30 posted to Stock but still keeps the $ 2,671.43 as a credit in GST Payable)

 

Remember, the ACTUAL cost/purchase of the Stock has already been accounted for in the Overseas Supplier’s Bill entered previously

This step is simply to ensure the correct amount of GST is being claimed!


  • All the other Customs Fees & Charges (including “Duty”) are just Expenses with no GST component.  (Technically they’re NCF, but if you’re using the Simplified BAS format then no tax code is fine)
(Edited)