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If you are currently registered as a VAT vendor or if you need
to register as a VAT vendor in future, you need to use Tax accounts to process
your transactions in batches and documents. If you are registered as VAT vendor
at your local Tax Office, you need to charge VAT on your Sales (Output Tax) and
to record the VAT (Input VAT) on your Purchases.
For each of these Tax types you may need to create additional sub-accounts to accommodate the various classifications and / or tax percentages to assist you in completing your VAT returns and make correct payments to the Tax authorities. If you have converted a Set of Books from a previous version of TurboCASH or Pastel version 5.2, your Tax or VAT accounts or codes will be automatically converted. TurboCASH will have set up an Output VAT and an Input VAT account as sub-accounts of the VAT Control Account as Current Liabilities for you in the templates.
You need to use this option whenever you wish to create a new Tax account or Tax code for VAT (Output Tax as well as Input Tax). You may also change the descriptions of an existing account, change the percentages and the dates of effect on your various tax types and percentages whenever the legislation is amended or to delete an existing account. The Tax codes and percentages, which apply for VAT, are prescribed by VAT or Tax Legislation and may be amended from time to time by the Tax Authorities.
The Tax codes and percentages differ from country to country and you may be required to change the percentages and create new codes when the legislation changes. It is of utmost importance that you create these codes and percentages correctly to suit your needs and the requirements of legislation applicable to your country. You need to have to create or add the Tax Accounts (Tax codes) which you will need to fill in your VAT return. TurboCASH will generate the necessary Tax or VAT reports for your Tax codes.
These Tax codes or Tax accounts should be created as sub-accounts. Before you may create the Tax codes you need the following 2 general ledger accounts created in the Edit - Accounts - General Ledger menu option:
There may be some other Tax codes, which may be applicable to your business, such as exempt supplies, etc. and these Tax codes and specific conditions for Output Tax or Input Tax may apply. It is recommended that you obtain the necessary information from your accountant or the tax authorities or visit the South African Revenue Services Web Site http://www.sars.gov.za to obtain the latest information.
In the United Kingdom some of the following VAT codes are currently used:
It is recommended that you obtain the necessary information from your accountant or the tax authorities or visit Her Majesty Customs and Excise Web Site http://www.hmce.gov.uk to browse the Web Site for Income Tax related issues for UK based Users.
To create a new Tax Account:
Click on the Edit - Accounts - Tax Account menu option or press the 
and 
and 
and 
keys on your keyboard. The
Tax Accounts search facility screen and the Tax Accounts screen will be displayed.
Press the 
button on your keyboard or click on the
Close 
button to
exit the Tax Accounts Search facility. The following Confirmation screen will be displayed:
Click on the 
button to create the Account.
Select and enter the following information:
Click on the 
button to save your changes. The Tax Accounts
Search facility will be displayed. Click on the Close button or press the
button to close and to exit the search facility screen and create your
next Tax Account.
Whenever you process a transaction in batches, you need to check on the source document if VAT applies and what category or code applies and select the applicable tax code for the transaction. TurboCASH will calculate the correct VAT inclusive or exclusive according to the percentages for which the VAT applies. The following guidelines as to transactions in batches / journals (on which Output or Input Tax code are applicable) is as follows:
If you are trading in stock items from your stock code file, you need to select the correct Output Tax and Input Tax codes, which applies to each of your Stock Items in the Edit - Stock Items menu option. When you process documents for your debtors or customers (invoices, credit notes, quotes and point-of-sale invoices), and you select a Stock Item, TurboCASH will calculate the correct Output Tax (VAT) inclusive or exclusive according to the percentages for which the VAT applies.
Should you process documents for your creditors or suppliers, (purchases, stock or goods returned documents or orders), TurboCASH will calculate the correct Input Tax (VAT) inclusive or exclusive according to the percentages for which the VAT applies.
It is important to check whether you enter your selling prices and your cost prices inclusive of VAT when you create and take-on your Stock Items. This is important, since you need to select the Inclusive or Exclusive mode when processing documents. This will definitely have an impact on the selling prices and cost prices and consequently, your gross and net profits.
For each of these Tax types you may need to create additional sub-accounts to accommodate the various classifications and / or tax percentages to assist you in completing your VAT returns and make correct payments to the Tax authorities. If you have converted a Set of Books from a previous version of TurboCASH or Pastel version 5.2, your Tax or VAT accounts or codes will be automatically converted. TurboCASH will have set up an Output VAT and an Input VAT account as sub-accounts of the VAT Control Account as Current Liabilities for you in the templates.
You need to use this option whenever you wish to create a new Tax account or Tax code for VAT (Output Tax as well as Input Tax). You may also change the descriptions of an existing account, change the percentages and the dates of effect on your various tax types and percentages whenever the legislation is amended or to delete an existing account. The Tax codes and percentages, which apply for VAT, are prescribed by VAT or Tax Legislation and may be amended from time to time by the Tax Authorities.
The Tax codes and percentages differ from country to country and you may be required to change the percentages and create new codes when the legislation changes. It is of utmost importance that you create these codes and percentages correctly to suit your needs and the requirements of legislation applicable to your country. You need to have to create or add the Tax Accounts (Tax codes) which you will need to fill in your VAT return. TurboCASH will generate the necessary Tax or VAT reports for your Tax codes.
These Tax codes or Tax accounts should be created as sub-accounts. Before you may create the Tax codes you need the following 2 general ledger accounts created in the Edit - Accounts - General Ledger menu option:
-
VAT Control Account - the main account, which will be used as
a totalling account for the Tax codes created in this menu option.
- VAT Payments Account - the sub-account which you need to allocate your Tax payable (as submitted on your VAT returns) when you make payments in the payments journal to the Tax Authorities. In the cases where the Input Tax is more than the Output Tax, where you need to allocate the refunds received from the Tax Authorities in the receipts journal.
|
Block on VAT Return |
Tax Code | Short Description |
| 1 | Output Tax - Standard Goods - 14% | Selling of Goods and Services |
| 1A | Output Tax - Standard Goods (Capital) - 14% | Selling of redundant equipment (old computers / vehicles, etc.) |
| 2 | Output Tax - Zero Rated - 0% | This is Taxable Supplies, but is rated at a zero rate (0%). |
| 15 | Input Tax - Standard Goods - 14% |
Purchases of goods and services, for which you have a
valid Tax Invoice from a registered VAT vendor. If you do not have a Tax Invoice or certain items are excluded from VAT (e.g. Tea refreshments, staff parties, expenses relating to exempt supplies, etc.) you need to select No Tax for the specific transaction. |
| 14 | Input Tax - Capital Goods - 14% | Purchases of Capital goods or services, which will be used in the business. |
| 17 | Adjustments - Bad Debts | If VAT was charged to Debtor accounts, and VAT (Output Tax) was submitted and paid over on a previous VAT return, and the amount is irrecoverable, the bad debts selling price - exclusive of VAT must be written off as bad debts and the tax amount to this Tax code. You need to keep proof that you have made attempts to collect this debt. |
There may be some other Tax codes, which may be applicable to your business, such as exempt supplies, etc. and these Tax codes and specific conditions for Output Tax or Input Tax may apply. It is recommended that you obtain the necessary information from your accountant or the tax authorities or visit the South African Revenue Services Web Site http://www.sars.gov.za to obtain the latest information.
In the United Kingdom some of the following VAT codes are currently used:
| Tax Code | Short Description |
| Output Tax - Standard Rate - 17,5% | Selling of Goods and Services |
| Output Tax - Reduced Rate - 5% | Selling of certain goods and services. |
| Input Tax - Standard Rate - 17,5% |
Purchases of goods and services, for which you have a
valid Tax Invoice from a registered VAT vendor. If you do not have a Tax Invoice or certain items are excluded from VAT (e.g. Tea refreshments, staff parties, expenses relating to exempt supplies, etc.) you need to select No Tax for the specific transaction. |
| Input Tax - Reduced Rate 5% | Purchases of specific goods or services, which will be used in the business. |
| Input Tax - Zero Rated - 0% | This is Taxable Supplies, but is rated at a zero rate (0%). |
It is recommended that you obtain the necessary information from your accountant or the tax authorities or visit Her Majesty Customs and Excise Web Site http://www.hmce.gov.uk to browse the Web Site for Income Tax related issues for UK based Users.
To create a new Tax Account:
Click on the Edit - Accounts - Tax Account menu option or press the and and and keys on your keyboard. The
Tax Accounts search facility screen and the Tax Accounts screen will be displayed.
Press the button on your keyboard or click on the
Close button to
exit the Tax Accounts Search facility. The following Confirmation screen will be displayed:Click on the button to create the Account.Select and enter the following information:| Option | Description |
| Account Number | Select the Account Number of the VAT Control Account. This Account should have already been created in the Edit - Accounts - General Ledger menu option. |
| Sub-Account | Enter three-digit numeric characters between the ranges 001 and 999. It is recommended that you group your Output Tax codes and Input Tax codes, leaving spaces to add or insert new Tax codes when the need arises. |
| Description | Enter the name for the Tax code or Account. It is recommended that the description should clearly reflect the Tax descriptions you need to select when processing transactions. |
| Account Group 1/2 | The Reporting group to which you wish this general ledger account to be allocated. Account Group 1 and 2 or any other name or description you have entered on the Reporting Group Name field on the Account Groups tab of the Setup - System Parameters - Groups menu option. You may select any available reporting group from the drop down list. |
| Valid From: | Select the starting date from which the applicable tax rate is valid. |
| To: | Select the end date until which the applicable tax rate is valid. If the date is not ascertainable, use a date far in the future. |
| Percentage: | Enter the percentage applicable to this tax account (e.g. 14.00 or 0.00), whichever is applicable. |
Click on the button to save your changes. The Tax Accounts
Search facility will be displayed. Click on the Close button or press the
button to close and to exit the search facility screen and create your
next Tax Account.
VAT in Batches / Journals
Whenever you process a transaction in batches, you need to check on the source document if VAT applies and what category or code applies and select the applicable tax code for the transaction. TurboCASH will calculate the correct VAT inclusive or exclusive according to the percentages for which the VAT applies. The following guidelines as to transactions in batches / journals (on which Output or Input Tax code are applicable) is as follows:
-
Output Tax is usually selected when transactions (on which
VAT is applicable) is entered in the sales journal or sales returns journal for debtors or
creditors and receipts journal.
- Input Tax is usually selected when transactions (on which VAT is applicable) is entered in the purchase journal or purchase returns journal for creditor suppliers and the payments journal and petty cash payments journal.
VAT on Documents
If you are trading in stock items from your stock code file, you need to select the correct Output Tax and Input Tax codes, which applies to each of your Stock Items in the Edit - Stock Items menu option. When you process documents for your debtors or customers (invoices, credit notes, quotes and point-of-sale invoices), and you select a Stock Item, TurboCASH will calculate the correct Output Tax (VAT) inclusive or exclusive according to the percentages for which the VAT applies.
Should you process documents for your creditors or suppliers, (purchases, stock or goods returned documents or orders), TurboCASH will calculate the correct Input Tax (VAT) inclusive or exclusive according to the percentages for which the VAT applies.
It is important to check whether you enter your selling prices and your cost prices inclusive of VAT when you create and take-on your Stock Items. This is important, since you need to select the Inclusive or Exclusive mode when processing documents. This will definitely have an impact on the selling prices and cost prices and consequently, your gross and net profits.
