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Self-assess taxes based on the cost of the product sold

  • 1 September 2023
  • 3 replies
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M
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Can you advise what functionality in IFS will be able to handle the following scenario.

Customer orders with Installation in British Columbia, the cost of the product is self-assessed 7% and remitted directly to Government of British Columbia. Customer is only charged GST for this type of sales. Company is responsible to self-asses and remit 7% of cost of product direct to BC Government.

The expected journal entries are as follows.

Credit BC PST , Debit COGS.

 

I have tried both use taxes and tax withhold type tax codes but was not successful in meeting the above requirement.

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Best answer by Thomas Peterson 6 September 2023, 18:53

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T
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Hi, 

The calculated vat is similar to what you want.  It creates tax but is not part of the AR (as customers do not pat that). You can see this in tax transactions, even have a tax report for this tax only.  

The postings would then be manual, and I think this is OK.   You could post the tax weekly, or monthly, or daily as needed.   The tax posting could be detailed or summary. I would think summary would be best as the details are in tax ledger. 

Quick / easy.   Not 100% automated in terms of the postings.  

I think the hardest part of the overall requirement is to correctly assess when the tax is to be applied and have back up to support this. The calculated vat does that. The posting / effort for posting at lump sum is insignificant effort compared to getting the tax assessment correct.  

For that reason, I would say this should be a workable solution. 

 

Best regards, 

Thomas

M
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Thanks Tom for your response, unfortunately they needed taxes to be self-assessed based on the cost of the product. I believe this will need to be a manual journal entry by running a cost report on the customer orders (report based on OESHIP entries). 

T
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Userlevel 7
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Hi, 

I get that.  As I had tried to explain the most difficult part is getting what transactions should be taxed and what should not. Then managing that process.    The tax amount is simply a calculation cost * tax rate for the given transactions.   

IMO, the calculated VAT gets much of what you need, not all.  So, IMO it’s pretty easy to use the part that gives us what we need then add further information to complete the data set. 

Best regards, 

Thomas

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