Purchase Orders & GST

Entering Purchases

There are two modes for entering purchase orders and stock receipts. Items can be entered ex tax and the GST can be calculated automatically, or the transaction can be marked as inclusive of tax. In this case GST is not calculated on the purchase but a tax amount can be entered manually.

There is a supplier screen field called Inclusive Tax that once ticked will result in tax not being calculated on individual line items for purchase orders and stock receipts.

This allows operators to enter the tax (e.g., GST) component of purchases manually. This is useful when there is a need to enter an order that does not show the GST amount exclusive of the prices of the items being purchased.

You may also set this option globally so that all purchases and stock receipts default to not calculating tax. If most of your orders show the GST as inclusive of the price this may be a desirable option.

If you want the purchase order and stock receipt system to default to not calculating GST automatically (you may still enter the GST component manually), then you need to do the following:

1. Start INSTALLATION Workshop.

2. Move to the Install menu.

3. Select General.

4. Move to the Tax Exemption field.

5. Enter the word INCLUSIVE here.

6. Click on Finished.

You can toggle between automatic or manual tax entry mode once you start a stock receipt or purchase order.

Entering the GST Manually

When you take delivery of a purchase order you will be presented with a field on the delivery screen called GST Charges $AUD. If CAPITAL has calculated the GST on each line item automatically, the amount of GST payable will be shown here. CAPITAL will not allow you to manually change this amount.

If the purchase order was entered without tax calculations (because, perhaps, the ex GST pricing was not available or shown on your supplier's invoice) then you can enter the GST component of the purchase into this field manually.

If tax processing on ordered line items is turned off for the transaction you are processing, doing this has consequences for the way in which your purchases are costed in your Stock Control system. Tax processing is considered "turned off" when the codes N/A appear at the bottom of the order next to the Tax: $ field.

With tax processing turned off on the transaction, CAPITAL will DEDUCT a proportion of the GST you enter into this field, from each stock item on your purchase order, and then place into stock the items you have delivered, excluding the GST component.

If tax processing is turned on, then CAPITAL has calculated and filled in the GST Charges $AUD field for you. If the amount is wrong, you should correct your tax code assignments before proceeding with the delivery of the order!

With tax processing turned on, the cost prices entered on your purchase order are considered "final" and are not altered by the system.

The amount shown in GST Charges $AUD is always inclusive of the total delivery. Altering this amount does not change the supplier invoice total.

While its not a good idea to manually enter the tax if you have an alternative (because this will lead to potential operator input mistakes), often you won't have a choice. Many businesses may send you invoices that do not show you your cost prices ex tax--even though this is essential information for any goods you intend to resell!

Rather than go through the tedious process of dividing every item by 11 (assuming a tax rate of 10%) to determine the ex GST cost price, it will be faster to enter the cost price including the GST and enter the GST you have been charged, separately.

Switching Between Automatic & Manual GST Calculations

There are two ways to toggle between automatic (exclusive tax) and manual (inclusive tax) processing. You can:

Open the suppler's account details
Move to the Tax No field and enter the words: INCLUSIVE and press the Save button. Then return to the purchase order.

(The word "inclusive" is suggested but any wording is acceptable here, except for NO or Nil.)

From the transaction menu select Inclusive Tax to toggle the setting.