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Using TurboCASH

 







TAX
VAT IN TurboCASH
  
You may need to register for VAT if you reach a specific threshold, as determined and amended by the legislation from time to time. Currently you need to be registered as a VAT vendor when your turnover is likely to exceed R 300 000 per annum in the Republic of South Africa (RSA), or 55 000 in the United Kingdom (UK). You may also register voluntarily as a VAT vendor if your turnover is less then the prescribed threshold but more than a minimum prescribed amount (e.g. R 20 000 per annum).

When you register as a VAT Vendor, you will receive a Registration Certificate from your local Tax Authority. The following information on this Tax certificate, need to be entered in TurboCASH:
Registration Number - Setup - System Parameters - Company Info (Address tab) - enter your VAT Registration Number in the Tax Reg. No. field.
Tax Method - Click on the Options tab and select the Tax Method - Invoice Based or Payments Based as indicated on your VAT Registration certificate.
Check and edit or create add the Tax Accounts - VAT Accounts - in the Edit - Accounts - Tax Accounts menu option. You need to check that the effective dates (from and to) and that the percentages, which apply to Tax Codes, are correct.

To control and record Input and Output VAT in TurboCASH, you need the following accounts:
  1. VAT Control Account - This is the main account for the VAT and which is a current liability account group in TurboCASH. This Account is created as in the Edit - Accounts - General Ledger menu option. TurboCASH will not allow you to post any transactions to this account, but it will use this account as a totalling account to reflect the net amount of the VAT (Input VAT and Output VAT) transactions for the Tax codes, you select when processing transactions in batches and / or documents.

     

  2. Tax Codes - You need to have a Tax code, for each of the VAT items or blocks you need to enter and submit on the VAT return. These Tax codes are sub-accounts, which is created in the Edit - Accounts - Tax Accounts menu option and not in the Edit - Accounts - General Ledger menu option. The Tax codes and percentages differ from country to country and you may be required to change the percentages and create new codes when the legislation changes. It is of utmost importance that you create these codes and percentages correctly to suit your needs and the requirements of legislation applicable to your country.

    These Tax sub-accounts or Tax codes will contain the description and percentage as prescribed by legislation for your country. When you process a transaction in a batch or a document, you need to select the Tax code on the Tax Accounts Search facility. If no VAT is applicable to a transaction (or if you are not registered as a VAT vendor) you need to select the No Tax code for the specific transactions.

    TurboCASH will automatically calculate the VAT amount according to the specified Tax code, if any other Tax code than the No Tax code is selected with a percentage (including zero-rated 0%), the transactions will be recorded and reported in each of these sub-accounts or Tax codes.

  3. VAT Payment Account - This is a General Ledger Sub-Account created in the Edit - Accounts menu option. It is important to create this account as a sub-account of the VAT Control Account. This Account is used to pay the amounts VAT amount payable to the Tax Authorities or to record the refunds (if any) from the Tax Authorities for VAT submitted on VAT returns.
3.1 VAT Payable

The net amount calculated and submitted on your VAT return at the end of the Tax period, needs to be paid to the Tax Authorities (if the Output VAT is more than the Input VAT). This account is used to record the VAT payment made to the Tax Authorities at the end of the Tax period. This payment would be entered in the Payments Journal for the Bank Account out of which you have issued a cheque or paid the amount payable by debit order, electronic funds transfer (EFT), or online banking. If you process the transaction in the Payments Journal, the VAT Payment Account needs to be selected on the Accounts Search facility when the payment transaction is entered.

3.2 VAT Refunds

You may also find that the Output VAT is less than the Input VAT (this will no occur frequently) may result that the Tax Authorities owes you a refund. This will occur if you have purchased, for example, capital goods, such as motor vehicles, furniture, machinery, etc. and the Tax legislation allows you to claim the Input Tax for the specific Tax period. If this refund is received from the Tax Authorities, this receipt would be entered in the Receipts Journal for the Bank Account in which you have deposited the refund or in which this refund was paid in by the Tax Authorities. If you process the transaction in the Receipts Journal, the VAT Payment Account needs to be selected on the Accounts Search facility when the receipt transaction is entered.

VAT in Batches / Journals

Whenever you process a transaction in batches, you need to check on the source document if VAT applies and what category or code applies and select the applicable tax code for the transaction. TurboCASH will calculate the correct VAT inclusive or exclusive according to the percentages for which the VAT applies. The following guidelines as to transactions in batches / journals (on which Output or Input Tax code are applicable) is as follows:


VAT on Documents

If you are trading in stock items from your stock code file, you need to select the correct Output Tax and Input Tax codes, which applies to each of your Stock Items in the Edit - Stock Items menu option. When you process documents for your debtors or customers (invoices, credit notes, quotes and point-of-sale invoices), and you select a Stock Item, TurboCASH will calculate the correct Output Tax (VAT) inclusive or exclusive according to the percentages for which the VAT applies.

Should you process documents for your creditors or suppliers, (purchases, stock or goods returned documents, or orders), TurboCASH will calculate the correct Input Tax (VAT) inclusive or exclusive according to the percentages for which the VAT applies.

It is important to check whether you enter your selling prices and your cost prices inclusive of VAT when you create and take-on your Stock Items. This is important, since you need to select the Inclusive or Exclusive mode when processing documents, since this will have an impact on the selling prices and cost prices and consequently, your gross and net profits.

At the end of the Tax Period (or any other time you wish), you need to generate the following reports to check your VAT and to fill in your VAT return:

To see a sample of the how VAT works in TurboCASH, click here.