FrontAccounting forum — VAT on purchase invoice

Re: VAT on purchase invoice

2010-07-17T19:53:13Z

If I understand from your post #22, are you saying that the system automatically fails to calculate purchase VAT (from the same item sold) just to account for the Purchase tax reclaimable?

No. System calculate taxes according to your setup . If you select tax group which does not contain taxes, no tax will be calculated.

Please read the related wiki page to learn how the tax system works in FA. It works exactly the same for sales and purchases (despite the taxes are posted to credit or debit GL side). Taxes calculated depend both on item involved (by Item Tax Type) and customer/ssuplier (by Tax Group).

Janusz

Re: VAT on purchase invoice

2010-07-17T15:50:32Z

If I understand from your post #22, are you saying that the system automatically fails to calculate purchase VAT (from the same item sold) just to account for the Purchase tax reclaimable?

Cos, I have a tax liability account named Sales tax to which the sales invoices entered credits the VAT element and further credits the net to the sales account.

On the other hand, I also have a current asset purchase tax account to which purchase tax is supposed to be debited and the net purchases figure further debited to the relevant purchases account.

The sales invoice aspect is done perfectly but the purchases aspect is not done because the purchase invoice tax is not calculated (though the field shows up in the form and appropriate tax group of 15% selected) in oder to post the tax element to the respective purchase tax account. I hope you understand my problem.

Re: VAT on purchase invoice

2010-07-17T15:35:34Z

This is not really the same item purchased for resale, in fact most of my purchase lines are expenses, even though others are for resale. I discovered the quick entry yesterday and realised that it does calculate the purchase tax alright.

I'm very sure "tax group" selected is not fully tax exempt, cos "exempt selected items do not show the tax field at all, but in my case, the fields are shown but just wouldn't calculate.

Please throw more light on creating quick entries with tax exempt items. I might be better off using the quick entries for all my supplier invoices since I don't make use of POs now.

Thanks.

Re: VAT on purchase invoice

2010-07-16T22:34:49Z

If tax is properly posted for sales invoice but this is not the case for supplier invoice (providing the same item is sold and purchased), the supplier used for purchase invoice has tax group selected which is fully tax exempt.

Janusz

Re: VAT on purchase invoice

2010-07-16T18:47:34Z

Well, I'm having a similar problem with purchase tax.

When I enter a supplier invoice the tax field fails to calculate and remain zero. The sales field on the sales invoice calculates alright posting the VAT element into its sales tax liability account and that is really cool.

But the purchase tax is really a pain for me since I manually calculate the VAT and use journal entry to post the tax element into its relevant account.

I would deeply appreciate any help to fix this. I'm running on version 2.2.8

Re: VAT on purchase invoice

2010-01-19T16:19:03Z

Well, it is possible to have a supplier where you buy items to go into the stock and other cost things that are not going into the stock.
This is the reason why both these options are in the Supplier Invoice/Credit note.
Normally there should be no problems having these operations in the same form. It has been here for 3-4 years, without any complains.

/Joe

Re: VAT on purchase invoice

2010-01-19T14:02:33Z

Well,. VAT group IS used for incoming invoices for every item included. I think you do not understand right how the tax system in FA works, but you can test it. Please observe how tax is calculated for items purchased from different suppliers for demo data. As example company use USD as home currency Junk Beer from Denmark is in Tax Exempt group, while Lucky Luck is domestic supplier. Therefore VAT is calculated for items form Lucky Luck, but not form Junk Beer.

Another thing is costs entered via GL lines on supplier invoice. Regardless of type of supplier, every individual GL line can have different nature. So even for tax exempt supplier the costs can have various tax rates related to every one GL line. If you do not want calculate it manually you should create quick journal entries for all tax schemes you wish to use.

The only constraint in purchasing is currently assumption that all suppliers us pricelists without VAT (this obviously does not mean they do not use tax, simply the tax is adde and not included). This constraint was here since the start of original system FA derives from, and unfortunately it wasn't removed so far. Originally the application was designed for b2b companies which usually use only prices stated without tax.

Finally I have to say that adding GL lines on purchase invoices was introduced to enable recording additional purchase costs. The best solution for 'non-core' purchases would be separated page with a little another ui structure, not needing selecting from predefined inventory list. FA still lack such a page, but adding manual change for tax rates in GL lines is in no way improvement. And in no case better solution than use of predefined quick journal entries.

Janusz

Re: VAT on purchase invoice

2010-01-19T09:39:49Z

Indeed the quick entry is handy for repeating simular bookings although I didn't use it yet (just noticed).

Still I would then like to know why I need to enter the VAT group for a supplier if it cannot be used for incoming supplier invoices? Where is it used?

It's true that various VAT rates are used. In the Netherlands we have also two rates. This is exactly the reason to keep more control on it. I would still love to see the default calculated TAX value with a possibility to change. And if I may dream more... a checkmark to indicate whether the entered values are including or excluding tax as this will change the tax calculation. I know an open source package doing this which I used to use since recently.

Re: VAT on purchase invoice

2010-01-18T22:36:30Z

shopimport wrote:

I noticed the quick entry. This still looks to fixed. I would really prefer to have a calculated VAT and a default purchase account. Simular to line item invoices, except then based on the supplier fields: VAT and Purchase Account.

Yes, quick entry is exactly for this kind of calculations. We cannot do it automatically on every GL line entered in purchase invoice just because different type of 'non-core' purchases can have various tax item rates. E.g. two different rates are used in most countries using VAT regulations.

Janusz

Re: VAT on purchase invoice

2010-01-18T21:46:04Z

For gl items, you should create Quick Entries for your various non items related entries. This is the best way of doing this.

/Joe

Re: VAT on purchase invoice

2010-01-18T20:36:20Z

True for invoices with item lines. And I'm only using items for the core activities.

However I was more thinking of the non-core activities, like a printshop invoice, or bank costs, or rental bills, or lunch receipt.

Then it would be great to select the printshop, enter the printshop invoice number and total amount, then let FrontAccounting calculate the VAT and prompt with the default account for this printshop (something like 'promotion costs').

I noticed the quick entry. This still looks to fixed. I would really prefer to have a calculated VAT and a default purchase account. Simular to line item invoices, except then based on the supplier fields: VAT and Purchase Account.

Re: VAT on purchase invoice

2010-01-18T15:54:11Z

If you have setup your supplier and items with correct tax groups/item tax types and correct purchase account, there shouldn't be any problems getting the correct tax calculated automatically for you.

/Joe

Re: VAT on purchase invoice

2010-01-18T11:12:01Z

I was very surprised that the supplier invoice form doesn't automatically calculate the VAT and set the default account.

When I get an incomming invoice for let's say a Prinshop I do enter it as a supplier with the VAT group and the Purchase Account. Then I enter the Supplier Invoice form and it doesn't take over the defaults for the Purchase Account, neither the VAT account. So now I have to remember the purchase account myself and add an extra line with the VAT amount. This decreases efficiency and increases human typo mistakes.

I would really appreciate if the values in the supplier record can be used as the defaults for the supplier invoice to set the VAT and the purchase account.

Re: VAT on purchase invoice

2009-08-12T08:45:52Z

The CVS for 2.2 is tagged 'unstable'. It is not fully merged with the last changes from 2.1.4. The merge only happens when minor releases are shipped.
We expect a shipment for the 2.2 RC in about one month, Though we may move the Item Tax Types to the other tax setup and perhaps rewrite it a bit. Janusz has announced this and I agree. It would be easier to understand it this way. So please expect up to 2 months.

/Joe

Re: VAT on purchase invoice

2009-08-12T08:24:57Z

Sounds good,

From what you have shown me I think FA does suite our purposes; that of a simple, web based mySQL double entry accounts package. I have taken the plunge and started entering cleanly this financial year. We are going to have to be creative with mapping our (currently excel based) accounts to the way FA does things, but from our research so far this seems to be true for any package.

Well done with what you have achieved so far and keep up the good work. I'm no PHP programmer, but I'd be happy to do what I can to help, if only beta test.

What is the timeline for 2.2?

I looked on the sourceforge CVS and I don't see a branch for the 2.2 development, is it available?