GST Rounding

GST Rounding

The invoice tax total isn’t exactly 10% of the invoice base total. Why?
 
This isn’t a mistake of the software but a common misconception between what users expect to see on an invoice and what software systems prefer to do when exchanging data. TransVirtual calculates Tax (GST) in the following way:
  1. Tax (GST) is calculated on each individual price before it’s added to an invoice.
  2. Each of these Tax (GST) amounts is rounded to the nearest whole cent.
  3. The Invoice Tax Total (GST) is calculated as the sum of the individual item tax (GST).
  4. Due to the rounding, the Tax Total (GST) will likely not be an exact 10% of the Invoice Base Total.
The more items on an invoice, the greater the impact of this rounding and the greater the potential difference in the totals.
 
This is an accepted way of rounding GST called the ‘Taxable Supply Rule’ as recognised by the ATO.  Please read the ‘Rounding of GST’ section on the following webpage: https://www.ato.gov.au/Business/GST/Tax-invoices/
 
The ‘Total Invoice Rule’ is the one most commonly used when manually calculating tax and the simplest one that most users will be familiar with.
 
The ‘Taxable Supply Rule’ is normally the expected method of calculating tax when transferring data between computer systems. It’s included as a feature of mainstream accounting packages such as Xero, MYOB and QuickBooks/Reckon.
 
TransVirtual calculates taxes based on the ‘Taxable Supply Rule’. If you are sending data to a 3rd party software system this will most often be their preferred method. Tax is calculated dynamically as each item is priced and added to an invoice with the Tax Total updated accordingly.
 
If after all of that you still want to use the ‘Total Invoice Rule’ there is an option to apply tax (GST) by using a levy in TransVirtual to apply a 10% charge against the base total. Be aware that this will only be applied once the invoice is closed and the base total is known.


    • Related Articles

    • Tax Rates

      TAX RATES SUMMARY / PURPOSE Use this article to create, manage, and apply tax rates in Transvirtual. This guide explains how tax rates work, when to create custom tax rules, and how to control when a tax rate applies using data filters. OVERVIEW The ...

    • TMS Finance Process Overview

      Pricing Overview Each consignment can have many prices: One Customer Auto Price - Generated from the customer rate card and added to a customer invoice Up to two Agent/Supplier Auto Prices - one for pickup, one for delivery. Generated from the ...

    • Glossary

      This section helps the user to provides definitions for specialized terms which were used throughout the manual. The intention of this article is to assist the user(s) to understand the terminology specific to the subject matter covered in the ...

    • Card Files (Customer)

      SUMMARY/PURPOSE Use this article to add, edit, import, delete, or configure customer cards in Transvirtual. This guide explains how to manage all aspects of customer information including contact details, logos, login credentials, consignment rules, ...

    • PDF/EXCEL REPORT TEMPLATES

      OVERVIEW Transvirtual uses a series of report templates that are used to generate the labels, consignment note PDFs, Invoice PDFs, etc. that you see when using Transvirtual. These report templates can be customized from the default version if ...