Payment Retentions

Overview of CAPITAL's Retention Tracking System

Retentions can be tracked for customer sales and supplier invoices.

CAPITAL will:

Allow you to assign a variable percentage rate for customers and/or suppliers that incur retentions.
Automatically calculate the amount of retention applicable, with the option for the user to override this amount.
Automatically generate a retention adjustment transaction during payment entry and allocation. CAPITAL does its best to ratio the amount of retention you specify according to the invoices and other transactions you pay.
Automatically rounds down retention amounts to the nearest whole dollar and ignores amounts less than $1.00.
Warns you if it is unable to allocate retentions to the transactions you specify due to over-allocations, etc.
Transfers/updates either your expense accounts (optional without general ledger) or your general ledger balances with the amount of retention collected or paid out.
Produces a comprehensive retention report to assist you in meeting your tax obligations. The report can be produced for customer or supplier related transactions.

Setting Up Retentions

To set-up the Retention Management Tracking System in CAPITAL you must run INSTALLATION Workshop.

Select the Install Menu, Taxes and then move to Retentions.

CAPITAL has 8 user defined transaction types. One of these must be allocated for retention adjustment/transaction tracking. For example, if your company does not handle lay-bys, then this transaction type could be used for retentions. You would, of course, change the name of the transaction from "lay-by" to "retention" as well.

By default, lay-by's are assigned transaction type 7. So you would enter 7 in the Transaction Type field. You would then go to Advanced|Transaction Sequences and change the name of the transaction to reflect its new purpose.

CAPITAL will automatically generate a retention transaction when necessary, i.e., when entering a payment which has a retention component, or a retention adjustment transaction may be entered or adjusted manually by the operator.

A unique transaction number sequence can be assigned to retention related adjustment transactions, as well as "expense" or general ledger account codes.

Marking Suppliers for Retention Tracking

To place a retention against a supplier account:

Go to Suppliers.
Find the supplier you wish to apply the retention to.
Go to the Settings tab of the supplier account.
In the Retention field enter the percentage of the transaction to retain, e.g., 48.5.

As of the writing of this documentation the present ruling is that if a supplier account does not have an Australian Business Number you must retain 48.5% of your payment and forward this to the Taxation Department. You do NOT have to record the supplier's ABN number (or their lack thereof) in your database. In relation to customers you do not have to record the ABN number either, provided that you have recorded the customer's address on your invoice transactions. Please consult your accountant or the Taxation Department for the latest information on this issue.

At the end of each tax period you can use the Retentions Report to help you determine how much you must forward to the Tax Department.

With the introduction of GST the Australian government promised the elimination of numerous old 'auxiliary' taxes. One way to achieve this goal, it appears, is to take an existing tax and call it something else.

The role of Retention Payments Tax (sometimes called Withholding Tax) has been greatly expanded under the new PAYG scheme. You may now be required by law to withhold payment to suppliers for various reasons, such as their inability to provide you with an Australian Business Number. As a consequence of the new rule changes, CAPITAL's existing Retentions Tracking System may now have to be used in your business.

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