Topic: What is 'tax-type' for ?

Simple question: when I define a GL-account, I can link a tax-type to the account. What is this actually doing, or where is it being used?

Re: What is 'tax-type' for ?

It is used for tax calculations during GL quick entry in payment/deposit registration if Use Tax option for given quick entry is set.


Re: What is 'tax-type' for ?

Thanks for your quick reply, but can you elaborate a little more on this:

What is calculated exactly and what is the result? I tried to find out what happens but nothing was showing. Will this create additional information/items that is visible in a tax-report? Because that is what I'm hoping for so I can book simple costs as a quick payment (without purchase-order and invoice) and have it's tax showing up in the tax-report.

So can you tell me, preferably step by step what workflow is used and what the results are.

4 (edited by p2409 12/30/2008 02:55:40 pm)

Re: What is 'tax-type' for ?

What happens depends on the transaction you are doing. If you don't want to use raise a purchase order, receive the goods and invoice and pay, then the GL tax accounts you specified won't be used so there's no workflow to describe.

The step by step workflow for PO/receive/invoice/pay is just the standard business flow. Taxes are recognised at both supplier, and item level.

For what you want to do (quick payments), I think you will need to do your own Bank Payment journal entries with one line for goods ex tax and one line for the tax paid.

V2.1 is going to have a quick payment facility that may address your issues, but I think it's still being designed/worked on by the developers. There is a thread on this somewhere.

What I'd love FrontAccounting to do (in 6.1) is have a quick payment transaction that
a) split the full purchase value into it's pre-tax and tax components automatically, based on the tax status of me and the item I'm buying.
b) Make TWO G/L entries, one for the goods, one for the tax

I think something along these lines is what the guy's have in mind.

Re: What is 'tax-type' for ?

Two things so far:

1. It seems that this is not what I hoped for, but that's ok. However, I did try to book a payment directly into the GL and split it into separate lines for tax and cost (no problem so far), but the tax-amount won't show up in the tax-report. So this negates the vallue of the tax-report for quick tax-reporting.

2. It still eludes me what the 'tax-type' is actually doing. Can someone give me an example of an entry that uses this and the results (and where I can fine/see the results).


Re: What is 'tax-type' for ?

When we are talking about this tax issue, we are talking about release 2.1.
The tax_code on the accounts in 2.1 has changed from tax_type to tax_group. In release 2.1 the tax report is terminated with the same tax inquiry that are shown in the Banking and General Ledger tab. This tax inquiry is based on the GL transactions.
You can use the quick entries to whatever you need. If you mark the entry line as tax include, the amount are reduced by the tax amount that are set in the tax group that are set on the account. F.i. Let us say you have a Phone entry line and tax included and amount is 0. If you select this quick entry and an amount of 100 the phone account line is first reduced by the tag group (if only one tax item of 25%) so the amount is going to be 80 and the tax line is set to 20. This tax line is of course included in the tax report when this report is calculated.
Try to do some experiments. Nothing happens as long as you do not process the bank payment/deposit/journal entry.
The quick entries is very flexible. You can do whatever you want to do. You can have as many lines you want or need.

The tax entries we are talking about in the quick entries has nothing to do with the trans tax tables in the debtors/suppliers trans. These tables are used when you use the normal item entries in customer/supplier invoice. However, those tax entries are going to the GL tax accounts when saving the documents. And these taxes are also shown when looking at the tax inquiry.

Quick entries is only a way of automatic entrance of many GL entry lines. But used right, it saves you a lot of time.


Re: What is 'tax-type' for ?

An example to see taxes at work (in 2.0, 2.1 is not ready)

Setup your tax types, and tax groups, ensure the customer branch has a tax group and that item types also have a tax group. In Sales Types, check that Retail has 'tax included' checked.

Now in Sales, make a Direct Invoice. When you process it you can then go to your G/L accounts you nominated to take the sales tax, and see the tax entries.