Invoice Consultant Gst Excel - PDF by mgz15305

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									QuickBooks 2010/11 GST update for
            NZ October Tax changes
Contents
 Frequently Asked Questions                                                                                    3
 Introduction                                                                                                  4
 When should this software update be applied?                                                                  4
 Products that this software update applies                                                                    4
 Changes for the transitional GST period                                                                       4
 Checking the software update is installed correctly                                                           4
 Updates for customers with multi-user mode enabled                                                            4
 Tax Code/Items Update                                                                                         5
 Steps for the QuickBooks 2010/11 GST update                                                                   5
    Updating your Data File                                                                                     5
 Manually decreasing item prices after the update                                                               7
    Using the Change Item Prices function                                                                       7
    Exporting to Excel                                                                                          8
 GST Rate Change Adjustment                                                                                    9
 Step 1. Determine your Qualifying Supplies                                                                    9
    Using QuickBooks to find your Qualifying Supplies                                                           9
    Calculating the GST Rate Change Adjustment                                                                 15
 Step 2. Complete the transitional GST 105 return                                                              15
 Step 3. Enter the amount of the GST Rate Change Adjustment in QuickBooks                                      15
    Create a Other Current Asset account                                                                       15
    Enter the amount in the new Other Current Asset account                                                    16
 Step 4. Pay open/unpaid invoices and bills                                                                    17
 Step 5. Complete your next normal GST 101 return                                                              18
 Step 6. Pay your tax liability to the IRD                                                                     18
 Things to note after updating your version of QuickBooks                                                      20
    Recall Last Transaction For This Name Preference                                                           20
    Pre-existing ST-S/ST-P tax items or ST-S/ST-P items                                                        20
    Manually updating Memorised Transactions                                                                   20
    Manually updating Fixed Price price levels                                                                 20
    Open Estimates, Sales Orders and Purchase Orders                                                           20
    Creating 12.5% tax transactions after October 1st 2010                                                     20
 Appendix A - Manually calculate your figures                                                                  21
 GST Rate Change Adjustment                                                                                    21
 Step 1. Determine your Qualifying Supplies                                                                    21
    Export this data out of QuickBooks                                                                         21
    Calculating the GST Rate Change Adjustment                                                                 21
 Step 2. Complete the transitional GST 105 return                                                              22
 Step 3. Enter the amount of the GST Rate Change Adjustment in QuickBooks                                      22
    Enter the amount in the new Other Current Asset account                                                    22
 Step 4. Pay open/unpaid invoices and bills                                                                    23
 Step 5. Complete your next normal GST 101 return                                                              24
    Calculate the gross amount of previously open/unpaid invoices and bills paid this period                   27
    If the IRD owes you - enter transactions in QuickBooks to recognise the loss incurred by GST Rate Change   27
    If you owe the IRD - enter transactions in QuickBooks to recognise the gain incurred by GST Rate Change    30




2
Note: This document does not constitute taxation advice and is provided purely as a user guide to
assist with the GST update for New Zealand users. It should not be relied upon in any business
sense for taxation purposes and you should consult your Accountant and/or Accredited Consultant
before acting upon some areas of this guide.

Frequently Asked Questions
Question: Does QuickBooks have the transitional GST 105 report?
Answer: No. Due to the fact that the GST transitional report is a one off it will not be included in
the QuickBooks software, however, this guide will give you the information required to complete the
transitional GST 105 report.


Question: I am on Invoice Basis accounting, do I need to do a transitional GST 105 report?
Answer: The advice we have received from the IRD is that you do not have to complete a transitional
GST 105 report. However, we advise you to check with your Accountant and/or Accredited Consultant to
ensure this is correct for your circumstances.


Question: The GST changes refer to Time of Supply, what does this mean?
Answer: The time of supply is determined by when the GST amount flows through to a tax liability. In the
case of Invoice Basis this is as soon as you invoice a customer whereas in the case of cash basis this is
when you enter the receipt of payment into QuickBooks.
The time of supply is a key factor when determining how much GST should be shown on the GST 101
return after October 1st 2010. For example, if you are on a cash basis and invoice a customer on
September 28th 2010 with a GST component, and then receive that payment after October 1st 2010,
you MUST report 15% GST through to the GST 101 return as the Time of Supply occurred during the
period where the rate was 15%. The customer still pays the same amount and you receive the same
amount but report more GST than was invoiced.


Question: Doesn’t this mean that I will pay more GST than I should?
Answer: No. The IRD has come up with a mechanism to determine a GST rate change adjustment for
the September 30th GST 101 return. This adjustment will be applied to GST in the future to cater for the
2.5% difference. This is why you would need to complete a transitional GST 105 report submitted to the
IRD department in your next GST return after September 30th 2010.


Question: Where can I find information about the transitional GST 105 report?
Answer: http://www.ird.govt.nz/changes/gst/businesses/returns/budget-gst-filing.html


Question: How can I find an Accredit Consultant?
Answer: Go to http://www.quicken.co.nz/support/find_a_trainer.asp.


Question: How can I contact Reckon NZ Support?
Answer: Call 0800 933 666




                                                                                                            3
Introduction
This document takes you through how the New Zealand Government changes for the 2010 Budget
have been implemented in QuickBooks 2010/11 and also how to get the data that you may require to
complete either a regular GST 101 return or a transitional GST 105 return.

When should this software update be applied?
Although this software update can be installed before October 1st 2010, Reckon highly recommends that
you consult either your Accountant and/or Accredited Consultant as to when installation of the software
update would best suit your business. If you install the software update prior to October 1st 2010 then
the default GST will be 15%.

Products that this software update applies
New Zealand products ONLY
 • QuickBooks EasyStart 2010/11
 • QuickBooks EasyStart Lite 2010/11
 • QuickBooks Accounting 2010/11
 • QuickBooks Plus 2010/11
 • QuickBooks Pro 2010/11
 • QuickBooks Premier 2010/11*
 • QuickBooks Enterprise 2010/11*
 • QuickBooks Premier Accountant 2010/11
 • QuickBooks Online 2010/11 brought to you by Reckon Online (No installation required)
*If you are using an industry specific version of these products then the software update can also be
installed onto those products.

Changes for the transitional GST period
The New Zealand Government has advised that there is a transitional period for GST changes. Due to
this a number of changes will occur to your QuickBooks data file during the upgrade process that will take
place after the software update is installed.

Checking the software update is installed correctly
After the software update is installed, open your data file and press Control and 1 at the same time. In
the window that opens ensure that the number next to R is 3, i.e R3.

Updates for customers with multi-user mode enabled
ON ALL SYSTEMS, WORKSTATIONS AND INSTALLATIONS OF QUICKBOOKS. This software update must be
installed on all systems in a multi-user mode environment. Otherwise the systems which do not have the
software update will not be able to open the QuickBooks data file once it is upgraded.




4
Tax Code/Items Update
Depending on how your QuickBooks data file has been setup a number of changes will occur during the
installation of the software update. These are listed below. In general a new tax code/item set will be
added and set to the 15% tax rate.
Current QuickBooks Setup                              Changes to QuickBooks file after upgrade
S Tax Codes/Items are not set to 15%                  S Tax Codes/Items are changed to ST
                                                      a new S Tax Code/Items are added at a rate of
                                                      15%
S Tax Codes/Items have been removed from the          S Tax Codes/Items are added to the file again.
file
S Tax Codes/Items are already set to 15%              No change.
As well as this, during the software update a number of new Tax Codes/Items are added to the file for
the transitional GST period. The usage of these codes should be discussed with your Accountant
and/or Accredited Consultant. The codes are as follows:
•   A new ST-P Tax Item (rename of S-P)
•   A new ST-S Tax Item (rename of S-S)
•   S-P Tax Item added to file at 15%
•   S-S Tax Item added to file at 15%
•   A new ST tax Code (rename of S)
•   A new S Tax Code set to 15%
     i.   Linked to S-S (15% for Sales)
    ii.   Linked to S-P (15% for Purchases)

Steps for the QuickBooks 2010/11 GST update
Note: Before installing this software update, a number of decisions need to be made that may
require some level of research and/or business analysis. Reckon recommends that you install this
software update when you have some time free and/or when the system is not being used, for
example weekends.

Note: If you are using EasyStart or EasyStart Lite, only the Sales Tax Codes for Items will be
updated.

Updating your Data File
Note: Please close QuickBooks before installing the update.

Note: If you decide to NOT update your prices during the update and click No to the update prices
dialogs, after the update has completed you will need to manually update your prices.
This is because when you click No, there will be no change to your item prices. They will not be
updated with the S (15%) Tax Code, instead they will be set to the ST (12.5%) Tax Code.
1. Open QuickBooks after you have installed the software update.
2. Ensure the software update is installed.




                                                                                                          5
3. Open your current QuickBooks file. The Update File to New Version window opens.




    This dialog is informing you that an update needs to occur before you can use your data file with the
    new update. Once you have updated you can’t use the data file in lower versions of QuickBooks.
4. To continue type YES in the text box and click OK.
    The Update Company dialog opens.




5. This is a final warning that your data file is going to be updated and will not be compatible with
   previous versions of the QuickBooks product. Click Yes to continue.
    Note: If you are running QuickBooks in a multi-user environment the software update must be
    installed on all workstations which have QuickBooks installed.
    The NZ GST Rate Update dialog opens.




6. This dialog is asking you whether you want to change your SALES prices in QuickBooks to reflect the
   new 15% GST rate.
    This means, if you have items with Amts Inc Tax selected and you click Yes, your gross sales price
    on those items will be changed to reflect the 2.5% tax increase. For example, if you had an item that
    had a gross price of $1000 which includes $111.11 (12.5%) tax then the new gross price will be
    $1022.22 which includes $133.33 (15%) tax.
    If you do not have items with Amts Inc Tax selected and you click Yes, there will be no change to the
    items price.
    If you choose to change this your items will be updated EXCEPT FOR INVENTORY ASSEMBLIES.
    Inventory Assembly items will need to be manually updated.

6
   When you click Yes, the next NZ GST Rate Update dialog opens.




7. This dialog is asking you whether you want to change your COST prices in QuickBooks to reflect the
   new 15% GST rate.
   This means, if you have items with Amts Inc Tax selected and you click Yes, your gross cost prices
   on those items will be changed to reflect the 2.5% tax increase. For example, if you had an item
   that had a gross cost of $1000 which includes $111.11 (12.5%) tax then the new gross cost will
   be $1022.22 which includes $133.33 (15%) tax.
   If you do not have items with Amts Inc Tax selected and you click Yes, there will be no change to
   the items cost.
   If you choose to change this your items will be updated EXCEPT FOR INVENTORY ASSEMBLIES.
   Inventory Assembly items will need to be manually updated.
8. When you click Yes, the update will then be completed.
Note: If you have clicked Yes to the update prices dialogs during the update process and want to
reverse the 2.5% GST increase on those prices, please see below for instructions on how to do
this.

Manually decreasing item prices after the update
If you want to manually decrease your item prices after you have run the update and selected to update
your prices, you have two options:
1. Use the Change Item Price function to decrease your net SALES item prices.
2. Export your item list to Excel to manually decrease both your COST and SALES item prices.

Using the Change Item Prices function
To manually update your net item sales prices:
1. Go to the Customers menu and click Change Item Prices.
2. From the Item Type drop-down list, select the item type.
3. Click Mark All, or select which items you want to change.
4. Enter -2.17391% in the Adjust price of marked items by (amount or %) field.
5. From the based on drop-down, select Current Price.




                                                                                                         7
6. Click Adjust.
    You will see that the prices have been changed.




Exporting to Excel
If you want to decrease both your SALES and COST prices, you can do the following:
1. Go to the File menu, click Utilities, click Export and then click Lists to IIF.
    The Export window opens.
2. Click to select Item List and then click OK.
    The Save As window opens.
3. Select a location to save the IIF and enter a name to save it as and then click Save.
    You will see a message telling you that “Your data has been exported successfully”.
4. Open the exported IIF in Excel.
5. Change the GROSSPRICE column for each item to the price you want to sell it for.
6. Note the first and last cell of your items GROSSPRICE column that you want to reduce the price of
   e.g. AH12 to AH42.
7. Go to the NETPRICE column of the first item, e.g. cell AI12.
8. Enter the following formula in the NETPRICE column; =sum(85/100)*AH12:AH42 (where AH12 is
   the first cell of your items GROSSPRICE column and AH42 is the last cell of your items gross price
   column).
9. Click and drag the NETPRICE formula to the last item cell, e.g. AI42.
10. Go to the PRICE column of the first item, e.g. M12, and enter the following formula; =AI12 (where
    AI12 is the NETPRICE column of the first item).
11. Click and drag the PRICE formula to the last item cell, e.g. M42.
12. Re-save the IIF.
13. Go back to Quickbooks.
14. Go to the File menu, click Utilities, click Import and then click IIF Files.
    The Import window opens.
15. Select the IIF and click Open.



8
Note: If you are using Retail Point of Sale and have barcodes, then you need to use the price
adjustment in Retail Point of Sale to ensure that you do not lose your barcodes.

GST Rate Change Adjustment

Note: The following only applies to Cash basis customers.
Due to the GST rate change on the October 1st 2010, many people will have to perform a GST Rate
Change Adjustment. For more information on the GST Rate Change Adjustment process please contact
the Inland Revenue Department of New Zealand or visit www.ird.govt.nz.
We recommend the following steps:
1. Determine your qualifying supplies (net open/unpaid invoices and bills) - see below.
2. Complete the transitional GST 105 return. - go to page 13.
3. Enter the amount of the GST Rate Change Adjustment from the IRD in a newly created account in
   QuickBooks - go to page 14.
4. After October 1st 2010, pay your open/unpaid invoices and bills in QuickBooks - go to page 15.
5. Complete the GST 101 return using the figures from the GST 101 - Rate Change report - go to page
   16.
6. Pay your tax liability to the IRD using the account created in Step 3 and your Tax Payable account -
   go to page 16.

Step 1. Determine your Qualifying Supplies
As part of the GST Rate Change Adjustment, you need to work out your qualifying supplies. The IRD
defines a qualifying supply as:
 • Is invoiced but not paid for before October 1st 2010
 • Is not an exempt supply or zero rated supply
 • Has not been accounted for in a GST return prior to September 30th 2010
 • Is not a bad debt which has been written off
For more information about qualifying supplies please contact the Inland Revenue Department of New
Zealand, your Accountant and/or Accredited Consultant.

Using QuickBooks to find your Qualifying Supplies

Note: If you are using QuickBooks EasyStart Lite or QuickBooks EasyStart, please contact your
Accountant and/or Accredited Consultant.


Note: You need to make sure that you are reporting in gross figures. To check this, go to the Edit
menu, click Preferences and then click Reports & Graphs. Click the Company Preferences tab and
under Default Reporting make sure that Gross is selected.


Note: You must run these reports at COB on September 30th 2010 or on October 1st 2010 for the
figures to be correct.

Sales
Assuming you have qualifying supplies you will need to get data out of QuickBooks to calculate your
GST Rate Change Adjustment.




                                                                                                          9
The easiest way to do this is as follows:
1. Go to the Reports menu, click Sales and then click Sales By Customer Detail.




2. Click Modify Report.
     Make sure that for the purpose of this report you have selected Accural in the Report Basis
     section.




3. Click the Display tab (it should be selected by default).
4. In the Columns list, click to select Tax Code. This will add the Tax Code column to the report.




10
5. Click the Filters tab.




6. In the Filters list, click to select Paid Status and then click to select Open (as shown in the image
   below).




                                                                                                           11
 7. In the Filters list, click TransactionType and then select Multiple Transaction Types (as shown in
    the image below).




 8. In the Select Transaction Types window, click to select Tax Invoice, Adjustment Note and then click
    OK.
 9. In the Filters list, click to select Tax Code and then select ST (as shown in the image below).




 10. Click OK. You will be returned to the report.


12
11. At the top of the report you need to set the dates to ALL.
12. Press Enter.
   The report will display all transactions which are outstanding on the September 30th 2010.
    Note: If you have any part payments on these transactions, they will show on this report as the
    full transaction amount. Please contact your Accountant and/or Accredited Consultant if you
    need assistance with this.
Purchases
Assuming you have qualifying supplies you will need to get data out of QuickBooks to calculate your GST
rate adjustment.
The easiest way to do this is as follows:
1. Go to the Reports menu, click Custom Transaction Detail Report.
   The Modify Report window opens.
2. Click the Display tab (this should be selected by default).
3. In the Columns list, click to select Tax Code (as shown in the image below). This will add the Tax
   Code column to the report.
4. Make sure that for the purpose of this report you have selected Accural in the Report Basis section.




5. Click the Filters tab.




                                                                                                          13
6. In the Filters list, click to select Tax Code and then select ST (as shown in the image below).




7. In the Filters list, click to select Transaction Type and then select Multiple Transaction Types.
     The Select Transaction Types window opens.
8. Click to select Bill and Bill Credit from the list.




9. Click OK.
10. In the Filters list, click to select Paid Status and then click to select Open.
11. Click OK. You will be returned to the report.
12. At the top of the report you need to set the dates to ALL.
13. Press Enter.
     The report will display all transactions which are outstanding on the September 30th 2010.




14
Calculating the GST Rate Change Adjustment
The following are the steps set out by the IRD for calculating the GST Rate Change Adjustment:
1. Determine your adjustment = Creditors minus Debtors (i.e. total unpaid bills minus total open
   tax invoices). For example, total unpaid bills $3375.00 minus total open invoices $13,500.00 to
   determine your net $10,125.00 (cr) (which is a tax credit from the IRD).
2. Divide your total (e.g. $10,125.00 (cr)) by 51.75 (e.g. equals $195.65 (cr)). This calculates the loss
   you incur on your net sales based on the 2.5% GST rate increase. (This is also known as the GST
   Rate Change Adjustment.)
3. The GST Rate Change Adjustment is to be claimed in Box 9 on your transitional GST 105 return.
The following table is a graphical representation of the above example:
Description                                          Total
Total unpaid bills                                   $3375.00
Total open tax invoices                              $13500.00
Total                                                $10,125.00 (cr)
Divide Total position by 51.75                       $195.65 (cr) (GST Rate Change Adjustment)
What if you owe the IRD a GST Rate Change Adjustment?
In some instances a business may find that it owes the IRD because the GST payable on the transaction
exceeds the GST received from Sales in the period.
The following are the steps set out by the IRD for calculating the GST Rate Change Adjustment:
1. Determine your adjustment = Creditors minus Debtors (i.e. total unpaid bills minus total open
   tax invoices). For example, unpaid bills total $13,500.00 minus open invoices total $3375.00 to
   determine your total $10,125.00.
2. Divide your total (e.g. $10,125.00) by 51.75 (e.g. equals $195.65). This calculates the gain you
   received on your net sales based on the 2.5% GST rate increase. (This is also known as the GST Rate
   Change Adjustment.)
3. The GST Rate Change Adjustment is to be claimed in Box 13 on your transitional GST 105 return.
The following table is a graphical representation of the above example:
Description                                          Total
Total unpaid bills                                   $13500.00
Total open tax invoices                              $3375.00
Total                                                $10,125.00
Divide Net position by 51.75                         $195.65 (GST Rate Change Adjustment)

Step 2. Complete the transitional GST 105 return
You can complete a transitional GST 105 return using data from the QuickBooks GST 101 report and the
GST Rate Change Adjustment that you have just calculated.
Note: If you need assistance with this please contact your Accountant and/or Accredited
Consultant.

Step 3. Enter the amount of the GST Rate Change Adjustment in QuickBooks
Before you can enter the GST Rate Change Adjustment amount in QuickBooks, you need to create an
account.

Create a Other Current Asset account
We suggest creating a Other Current Asset account in QuickBooks so you can record the GST Rate
Change Adjustment amount.


                                                                                                            15
To do this:
1. Go to the Lists menu and click Chart of Accounts.
2. Click the Account button at the bottom of the window and click New.
3. From the Other Account Types drop-down, select Other Current Asset.
4. Click Continue.
5. Enter GST Rate Change Adjustment in the Account Name.
6. Click Save & Close.




Enter the amount in the new Other Current Asset account
We suggest that you enter this transaction on the day you lodge your return or when you receive your
assessment from the IRD. It must be entered before you do the next (normal) GST 101 return.
This is if the IRD owes you a GST Rate Change Adjustment
1. Go to the Company menu and click Make General Journal Entries.
2. Enter 01/10/2010 in the Date field.
3. In the Account column, select Tax Payable.
4. In the Debit column, enter the GST Rate Change Adjustment, (e.g. $195.65 from our example).
5. In the next row’s Account column, select the newly created Other Current Asset account (GST Rate
   Change Adjustment).




16
6. Click Save & Close.




This is if you owe the IRD a GST Rate Change Adjustment
1. Go to the Company menu and click Make General Journal Entries.
2. Enter 01/10/2010 in the Date field.
3. In the Account column, select Tax Payable.
4. In the Credit column, enter the GST Rate Change Adjustment, (e.g. $195.65 from our example).
5. In the next row’s Account column, select the newly created Other Current Asset account (GST Rate
   Change Adjustment).
6. Click Save & Close.




Step 4. Pay open/unpaid invoices and bills
After October 1st 2010, proceed as normal in paying your open/unpaid invoices and bills in QuickBooks.




                                                                                                         17
Step 5. Complete your next normal GST 101 return
IMPORTANT: This report is to be used as a guide only. If you drill down on this report, the transaction
amounts will be based on 12.5% tax rate.
We have created a special report for you to assist in preparing your GST 101 returns after October 1st
2010, which includes transactions initiated prior to October 1st 2010. This report displays the GST
amounts as if they had been received at 15% as per the IRD requirements.
Note: This report should only be used if you are on a payments (cash) basis for accounting. If you
are not sure please check with your Accountant and/or Accredited Consultant.
To do this:
 • Go to the Reports menu, click Tax and then click GST 101 - Rate Change.
You can now use these figures to complete your GST 101 return and submit it to the IRD.




Step 6. Pay your tax liability to the IRD
When you receive your tax bill from the IRD based on your GST 101 return you need to pay it using
the GST Rate Change Adjustment (Other Current Asset) account (that you created earlier) and your Tax
Payable Account.
To do this:
1. Go to the Suppliers menu, click Tax Activities and then click Pay Tax.
2. In the Account column, select Tax Payable (this should automatically be selected).
3. In the Gross Amt column, enter the total of your tax bill minus the GST Rate Change Adjustment.
4. In the next row’s Account column, select the newly created Other Current Asset account (GST Rate
   Change Adjustment).


18
5. In the Gross Amt column, enter the GST Rate Change Adjustment, (e.g. $195.65 from our example)




6. Click Save & Close.




                                                                                                    19
Things to note after updating your version of QuickBooks
The following are things that you need to be aware of after you have updated your QuickBooks data file
with the GST rate change.

Recall Last Transaction For This Name Preference
If you have your General Preferences (go to the Edit menu, click Preferences, then click General) set to
Automatically recall last transaction for this name and have created bills for a Supplier using the S tax
code, after you upgrade and enter a transaction for the same supplier the new ST tax code will be used.
If you require the new 15% GST rate for a supplier, select the new S Tax code manually for the first
transaction after the upgrade.

Pre-existing ST-S/ST-P tax items or ST-S/ST-P items
If you are already using ST-S or ST-P tax items for your transactions, when you upgrade the ST-S or ST-P
tax item will not be created. This is also the case if you have created ST-S or ST-P items. This is because
QuickBooks does not allow duplicate item names.

Manually updating Memorised Transactions
If you have any Memorised Transactions using the S tax code, after you upgrade the tax code will be
changed to the new ST tax code.
Therefore, any Memorised Transactions that require the new 15% tax rate will need to manually be
updated with the new S tax code.

Manually updating Fixed Price price levels
If you have any Fixed Price price levels you may need to manually adjust these after upgrading to reflect
the new 15% tax rate.

Open Estimates, Sales Orders and Purchase Orders
If you have any open Estimates, Sales Orders or Purchase Orders that used the S tax code prior to
upgrading, then after applying the upgrade these transactions will use the newly created ST tax code.
Therefore, you may need to manually select the new 15% S tax code when creating Invoices or Bills based
on these transactions.

Creating 12.5% tax transactions after October 1st 2010
If you want to create a transaction using the 12.5% tax rate after you have upgraded your QuickBooks
data file, simply use the newly created ST tax code.




20
Appendix A - Manually calculate your figures
IMPORTANT: The following procedures can be used instead of using the GST 101 - Rate Change
report. You would do the following if you require full auditing of the extra 2.5% on each transaction.
If you have chosen to use the earlier steps in this guide, using the GST 101 - Rate Change report
from page 9 then the steps in this Appendix do not need to be followed.
If you would like to calculate all your figures manually, please follow these steps.

GST Rate Change Adjustment

Note: The following only applies to Payments basis customers.
Due to the GST rate change on the October 1st 2010, many people will have to perform a GST Rate
Change Adjustment. For more information on the GST Rate Change Adjustment process please contact
the Inland Revenue Department of New Zealand or visit www.ird.govt.nz.
We recommend the following steps:
1. Determine your qualifying supplies (net open/unpaid invoices and bills) and keep a track of all of
   these externally to QuickBooks (e.g. in Excel) - go to page 7.
2. Complete the transitional GST 105 return.
3. Enter the amount of the GST Rate Change Adjustment from the IRD in a newly created account in
   QuickBooks.
4. After October 1st 2010, pay your open/unpaid invoices and bills in QuickBooks. And keep track of
   these externally to QuickBooks (e.g. in Excel).
5. Complete the next normal GST 101 return.
   i.    Calculate the net amount of previously open/unpaid invoices and bills.
   ii.   Enter transactions in QuickBooks to recognise the loss or gain incurred by the GST Rate Change.

Step 1. Determine your Qualifying Supplies
Determine your qualifying supplies as detailed earlier in this document, go to page 7.

Export this data out of QuickBooks
It is recommended that you export this data out of QuickBooks into an external application, such as
Excel. Then you can modify the data to show the key information for open invoices and unpaid bills. We
also suggest creating a PAID column (or something similar), so you can mark off each open invoice or
unpaid bill when they are paid.

Calculating the GST Rate Change Adjustment
This is if the IRD owes you a GST Rate Change Adjustment
The following are the steps set out by the IRD for calculating the GST Rate Change Adjustment:
1. Determine your adjustment = Creditors minus Debtors (i.e. total unpaid bills minus total open
   tax invoices). For example, total unpaid bills $3375.00 minus total open invoices $13,500.00 to
   determine your net $10,125.00 (cr) (which is a tax credit from the IRD)
2. Divide your total (e.g. $10,125.00 (cr)) by 51.75 (e.g. equals $195.65 (cr)). This calculates the loss
   you incur on your net sales based on the 2.5% GST rate increase. (This is also known as the GST
   Rate Change Adjustment.)
3. The GST Rate Change Adjustment is to be claimed in Box 9 on your transitional GST 105 return.




                                                                                                            21
The following table is a graphical representation of the above example:
Description                                          Total
Total unpaid bills                                   $3375.00
Total open tax invoices                              $13500.00
Total                                                $10,125.00 (cr)
Divide Total position by 51.75                       $195.65 (cr) (GST Rate Change Adjustment)
What if you owe the IRD a GST Rate Change Adjustment?
In some instances a business may find that it owes the IRD. The GST payable on the transaction exceeds
the GST received from Sales in the period.
The following are the steps set out by the IRD for calculating the GST Rate Change Adjustment:
1. Determine your adjustment = Creditors minus Debtors (i.e. total unpaid bills minus total open tax
   invoices). For example, unpaid bills total $13,500.00 minus open invoices total $3375.00 minus to
   determine your total $10,125.00.
2. Divide your total (e.g. $10,125.00) by 51.75 (e.g. equals $195.65). This calculates the gain you incur
   on your net sales based on the 2.5% GST rate increase. (This is also known as the GST Rate Change
   Adjustment.)
3. The GST Rate Change Adjustment is to be claimed in Box 13 on your transitional GST 105 return.
The following table is a graphical representation of the above example:
Description                                          Total
Total unpaid bills                                   $13500.00
Total open tax invoices                              $3375.00
Total                                                $10,125.00
Divide Net position by 51.75                         $195.65 (GST Rate Change Adjustment)

Step 2. Complete the transitional GST 105 return
You can complete a transitional GST 105 return using data from the QuickBooks GST 101 report and the
GST Rate Change Adjustment that you have just calculated.
Note: If you need assistance with this please contact your Accountant and/or Accredited
Consultant.

Step 3. Enter the amount of the GST Rate Change Adjustment in QuickBooks
Before you can enter the GST Rate Change Adjustment amount in QuickBooks, you need to create an
account.

Enter the amount in the new Other Current Asset account
We suggest that you enter this transaction on the day you lodge your return or when you receive your
assessment from the IRD. It must be entered before you do the next (normal) GST 101 return.
This is if the IRD owes you a GST Rate Change Adjustment
1. Go to the Company menu and click Make General Journal Entries.
2. Enter 01/10/2010 in the Date field.
3. In the Account column, select Tax Payable.
4. In the Debit column, enter the GST Rate Change Adjustment, (e.g. $195.65 from our example).
5. In the next row’s Account column, select the newly created Other Current Asset account (GST Rate
   Change Adjustment).



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6. Click Save & Close.




This is if you owe the IRD a GST Rate Change Adjustment
1. Go to the Company menu and click Make General Journal Entries.
2. Enter 01/10/2010 in the Date field.
3. In the Account column, select Tax Payable.
4. In the Credit column, enter the GST Rate Change Adjustment, (e.g. $195.65 from our example).
5. In the next row’s Account column, select the newly created Other Current Asset account (GST Rate
   Change Adjustment).
6. Click Save & Close.




Step 4. Pay open/unpaid invoices and bills
After October 1st 2010, process any payments of open/unpaid invoices and bills as you normally would
in QuickBooks and also mark them as paid externally to QuickBooks (e.g. in Excel - whatever you have
created previously).


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Step 5. Complete your next normal GST 101 return
We suggest that to assist with completing your next normal GST 101 returns, you do the following:
 • Calculate the net amount paid of previously open/unpaid invoices and bills since 01/10/2010.
 • Enter transactions in QuickBooks to recognise the loss/gain incurred by GST Rate Change Adjustment -
   this is done using journal transactions and a tax invoice/bill.
 • Complete the GST 101 return.
Before you can correctly do this we also suggest creating an item, a customer and two tax items and two
tax codes to assist in tracking the GST Rate Change Adjustment in QuickBooks.
Create a new Service item
We suggest that you create a new Service item to use for the Tax invoice to track the GST Rate Change
Adjustment payment.
To do this:
1. Go to the Lists menu and click Item List.
2. Click the Item button and the bottom of the window and click New.
3. In the Type drop-down, select Service.
4. Enter GST Rate Change Adjustment in the Item Name/Number field.
5. Enter a Description, e.g. GST Rate Change Adjustment.
6. Delete the tax code.
7. In the Account drop-down, select Sales.
8. Click OK.




Create a new customer
We suggest that you create a new customer to use for the Tax invoice to track the GST Rate Change
Adjustment payment. (If you owe the IRD money and therefore need to create a Bill and Supplier we have
detailed this later in this document.)



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To do this:
1. Go to the Customer Centre.
2. Click New Customer & Job and then click New Customer.
3. Enter IRD GST Rate Change Adjustment in the Customer Name field.
4. Click OK.
Create two new tax items and two new tax codes
We suggest that you create two new tax codes and tax items to use for the Tax invoice to track the GST
Rate Change Adjustment payment.
To create the new tax items, do this:
1. Go to the Lists menu and click Tax Item List.
2. Click the Item button at the bottom of the window and click New.
3. In the Type drop-down, select Tax Item.
4. Enter TR100 in the Name field.
5. Enter a Description, e.g. GST Rate Change Adjustment Plus.
6. Enter 100.0% in the Tax Rate (%) or Amt field.
7. From the Tax Agency drop-down, select Inland Revenue Department.




8. Click Next.
9. Enter TR0 in the Name field.
10. Make sure 0.0% is in the Tax Rate (%) or Amt field.




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11. From the Tax Agency drop-down, select Inland Revenue Department.




12. Click OK.
To create the new tax codes, do this:
1. Go to the Lists menu and click Tax Code List.
2. Click the Tax Code button at the bottom of the window and click New.
3. Enter TR100 in the Tax Code field.
4. Enter a Description, e.g. GST Rate Change Adjustment.
5. From the Sales Tax Item drop-down, select TR100.




6. Click Next.
7. Enter TR0 in the Tax Code field.
8. Enter a Description, e.g. GST Rate Change Adjustment.




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9. From the Sales Tax Item drop-down, select TR0.




10. Click OK.

Calculate the gross amount of previously open/unpaid invoices and bills paid this period
This refers to any open/unpaid invoices and bills as at 30/09/2010 that have been paid in this reporting
period.
1. Determine your adjustment = Creditors minus Debtors (i.e. total unpaid bills minus total open
   tax invoices). For example, unpaid bills total $3375.00 minus open invoices total $7875.00 to
   determine your total $4500.00 (cr).
2. Divide your total (e.g. $4500.00 (cr)) by 51.75 (e.g. equals $86.95 (cr)). This calculates the loss
   incurred on these transactions based on the 2.5% GST rate increase. (This is the amount of the GST
   Rate Change Adjustment that is being used.)
What if you owe the IRD?
1. Determine your adjustment = Creditors minus Debtors (i.e. total unpaid bills minus total open tax
   invoices). For example, unpaid bills total $7875.00 minus open invoices total $3375.00 to determine
   your total $4500.00.
2. Divide your total (e.g. $4500.00) by 51.75 (e.g. equals $86.95). This calculates the gain incurred
   on these transactions based on the 2.5% GST rate increase. (This is the amount of the GST Rate
   Change Adjustment that is being used.)

If the IRD owes you - enter transactions in QuickBooks to recognise the loss incurred by
GST Rate Change
IMPORTANT: If you owe the IRD money, please go to page 28.
Enter the Tax Invoice and Adjustment Note
Enter a tax invoice in QuickBooks dated the last day of the reporting period for the amount of the GST
Rate Change Adjustment being used.
Because of the restrictions of entering tax on invoices, you will need to add an invoice and then an
adjustment note.
To do this:
1. Go to the Customers menu and click Create Invoice.
2. From the Customer:Job drop-down, select IRD GST Rate Change Adjustment (that you created
   earlier).
3. From the Template drop-down, select Quicken Service Invoice.
4. In the Item column, select GST Rate Change Adjustment (that you created earlier).

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5. Enter 1 in the Qty column.
6. Enter the loss incurred in the Price column (in our example this is $86.95).
7. In the Tax column, select TR100.




8. Click Save & Close.
Enter the Adjustment Note
To do this:
1. Go to the Customers menu and click Create Adjustment Note.
2. From the Customer:Job drop-down, select IRD GST Rate Change Adjustment (that you created
   earlier).
3. In the Item column, select GST Rate Change Adjustment (that you created earlier).
4. Enter the loss incurred in the Rate column (in our example this is $86.95).
5. In the Tax column, select TR0.
6. Click Save & Close.
     The Available Credit window opens.
7. Select to Apply to a tax invoice and click OK.
     The Apply Credit to Invoices window opens.
8. Select the invoice that you just created and click Done.
Pay the tax invoice using a General Journal entry
The tax invoice amount should be paid from the GST Rate Change Adjustment account that you created
earlier using a General Journal entry.
To do this:
1. Go to the Company menu and click Make General Journal Entries.
2. In the Account column, select Accounts Receivable.
3. In the Credit column, enter the Tax invoice amount, (e.g. $86.95 from our example)
4. In the Name column, select the IRD GST Change Adjustment customer (that you created earlier).
5. In the next row’s Account column, select the newly created Other Current Asset account (GST Rate
   Change Adjustment).
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6. Click Save & Close.




Receive payment for the tax invoice using the Credit Note
You now need to receive payment for this tax invoice using the credit note created by the General Journal.
This will reduce the amount in the GST Rate Change Adjustment (Other Current Asset) account.
To do this:
1. Go to the Customers menu and click Receive Payments.
2. From the Received From drop-down list, select IRD GST Rate Change Adjustment (the customer you
   created earlier).
3. Click Credits.
    The Credits window opens.




4. Click Done.


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5. Click Save & Close.

If you owe the IRD - enter transactions in QuickBooks to recognise the gain incurred by
GST Rate Change
Enter a bill
1. Go to the Suppliers menu and click Enter Bill.
2. From the Supplier drop-down, select <Add New>.
3. Enter a Supplier Name, e.g. IRD GST Rate Change Adjusment and click OK.
4. Click the Items tab.
5. In the Item column, select GST Rate Change Adjustment (that you created earlier).
6. Enter 1 in the Qty column.




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7. Enter the gain incurred in the Gross Amt column, (in our example this is $86.95).




8. Click Save & Close.
Pay the bill using a General Journal entry
The bill amount should be paid from the GST Rate Change Adjustment account that you created earlier
using a General Journal entry.
To do this:
1. Go to the Company menu and click Make General Journal Entries.
2. In the Account column, select Accounts Payable.
3. In the Debit column, enter the Bill amount.
4. In the Name column, select the IRD GST Change Adjustment supplier (that you created earlier).
5. In the next row’s Account column, select the newly created Other Current Asset account (GST Rate
   Change Adjustment).




6. Click Save & Close.
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Pay the Bill using the Credit Note
You now need to pay the bill using the credit note created by the General Journal. This will increase the
amount in the GST Rate Change Adjustment (Other Current Asset) account.
To do this:
1. Go to the Suppliers menu and click Pay Bills.
2. Select the Bill that you just entered.
3. Click Set Credits.
     The Credits window opens.




4. Select the credit.
5. Click Done.
6. Click Pay Selected Bills.
7. Click Done.




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Print the GST 101 report from QuickBooks
You can now print your GST 101 report.
To do this:
• Go to the Reports menu, click Tax and then click GST 101.




Using our one of our examples (when the IRD owes you a GST Rate Change Adjustment) this image of the
GST 101 report shows the following:
 • Total sales that we have collected since October 1st 2010 ( e.g. $7875.00 from Customers and
   $86.95 from the IRD).
 • Total GST collected on sales is equal to the GST you charged on these sales plus the net GST Rate
   Change Adjustment of sales and purchases (e.g. $875.00 + $89.95)
You can double-click on this report to zoom on transactions if you want more information.
IMPORTANT: If the IRD owed you a GST Rate Change:
Due to the nature of doing this manually, Box 1 on the GST 101 will display more in Gross sales.
To make sure that you get the correct figure on the GST 101 that you submit to the IRD, please
take the figure from the QuickBooks GST 101 report and subtract your calculated GST rate change
adjustment BEFORE transcribing the data onto your GST 101.
Due to this, if you are using the manual steps you will not be able to print the GST 101 directly from
QuickBooks for submission to the IRD.

IMPORTANT: If you owed the IRD a GST Rate Change:
Due to the nature of doing this manually, Box 11 on the GST 101 will display more in Gross
purchases. To make sure that you get the correct figure on the GST 101 that you submit to the IRD,
please take the figure from the QuickBooks GST 101 report and subtract your calculated GST rate
change adjustment BEFORE transcribing the data onto your GST 101.
Due to this, if you are using the manual steps you will not be able to print the GST 101 directly from
QuickBooks for submission to the IRD.




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