Calculating Tax — Overview

Sage 300 ERP

Calculating Tax — Overview

Accounts Payable provides you with three methods for entering tax amounts and tax bases on invoices, credit notes, and debit notes.

On the Invoice Entry form, the Taxes tab provides fields that let you specify how taxes are calculated for the current document. In the Tax Amount and the Tax Base field, you can select:

  • Enter — then manually enter total tax amounts and/or tax bases on the Taxes tab, and enter tax amounts for each detail in the Accounts/Taxes form using the information from the invoice.

If you want, you can distribute amounts automatically to the invoice details using the Distribute Taxes button. You can edit the detail taxes, later, in the Detail Accounts/Taxes form.

Clicking the Calculate Taxes button overrides all manually entered taxes (the total amounts on the Taxes tab as well as the detail taxes).

  • Distribute — then manually enter the total tax amounts and/or tax bases on the Invoice Entry form's Taxes tab, using the information from the invoice, then distribute amounts automatically to the invoice details using the Distribute Taxes button.

You cannot edit taxes on the Detail Accounts/Taxes form if you choose this method.

  • Calculate — then have the program calculate taxes and distribute them when you add the invoice or distribute the invoice amount.

If you choose Calculate for the tax amount and Distribute or Enter for the tax base, the program uses the tax base to calculate tax amounts automatically.

You specify whether the distribution amounts are net of taxes or include taxes (on the Taxes tab of the Invoice Entry form).

If you assign to the invoice a tax group that uses a different currency that the vendor, a Tax Reporting field appears, letting you specify an entry method for amounts to  .

Accounts Payable automatically uses the default tax entry method that you chose on the Transactions tab of the Options form. You can change the method on individual invoices.

The main reasons for having the program calculate tax are:

  • To check the tax amount that appears on the invoice.
  • To track a tax which is hidden in the invoice total.

Tax on retainage

You can report taxes on retainage amounts when you post an original invoice or when specified by a tax authority. Accounts Payable respects the option specified for each tax authority.

This feature meets the reporting requirements for GST and VAT, for which tax is reported separately on the amount payable on the original invoice, and then on the amount of the retainage when the retainage is due.

Tax Reporting Currency

You can specify a tax reporting currency, and automatically calculate taxes in source currency, functional currency, and the tax reporting currency. (This feature is required in some jurisdictions, such as Singapore.)

Tax Services stores tax information and tracks taxes

Account Payable gets all its tax rates and tax account information from Tax Services, which is part of Sage 300 ERP's Common Services.

When Accounts Payable distributes tax amounts, it:

  • Checks the Taxes tab to see which taxes apply to the vendor and the tax entry method.

If Calculate is not selected, the program uses the tax amounts entered on the Taxes tab.

If Calculate is selected, it checks the Tax Included settings, then calculates the total tax amount for the distributions listed on the Document tab.

  • Allocates entered or calculated taxes in the same proportion as you distributed the rest of the invoice amount.
  • Removes any proportion of the tax which is recoverable from the tax distribution amount and assigns it to the tax recoverable account.

You define tax authorities and specify whether taxes are recoverable using the forms in the Tax Services folder. See the Tax Services online Help (open a Tax Services form and press F1.

  • Removes any tax which is separately expensed from the tax distribution amount and assigns it to the tax expense account.

You specify whether taxes are separately expensed using Tax Services.

Note that Tax Services performs the tax calculations when you choose the Distribute Taxes button on the Taxes tab.

Also note that whether you let the program calculate taxes or you enter them manually, Accounts Payable sends all the appropriate tax information to Tax Services for tax reporting purposes.

Tax groups and tax authorities

The tax group you select determines which tax authorities appear on the Taxes tab and the tax class of each tax authority.

The only way to change the list of tax authorities is by changing the tax group.

Tax classes

The tax class usually determines whether goods are taxable. You can change the tax classes for different tax authorities on the Vendor Taxes tab.

If you select Calculate as the tax entry method, you can also change the tax classes for particular distribution lines by pressing F9 when the line is highlighted.

If you select Calculate as the tax entry method, the only way to change the tax authorities or amounts calculated for an invoice, credit note, or debit note is by:

  • Changing the tax group

Or

  • Changing the tax classes

If you select Enter as the tax entry method, you can enter all tax amounts directly. You can also use the Distribute Taxes button to distribute taxes to the invoice details.

If you select Distribute as the tax entry method, you use the Distribute Taxes button to allocate to invoice details total tax amounts you enter manually.

Whatever method you choose, you can always override manually entered amounts by choosing the Calculate Taxes button.

Multicurrency ledgers

If you use multicurrency accounting, you can change only to another tax group that also uses the vendor's currency.

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