Forum Discussion

SherylBT's avatar
SherylBT
User
5 years ago
Solved

GST on Commission appearing as a negative purchase

As a booking agent for tour operators, we enter the cost of the tour as a purchase less the commission. The purchase is an expense and the commission is income. We pay the operator the balance once t...
  • StephanieLee's avatar
    StephanieLee
    5 years ago

    Hi SherylBT, I use the method Steven_M has suggested, having two cards for each supplier (one a customer and one a supplier) and using a "contra" bank account to offset the sale amount of the commissions from the suppliers purchase.  I take your point though, it certainly is a lot of work if there are a large volume of transactions.

     

    One work around might be to do just two journals at the end of the BAS reporting period to "correct" the entries in bulk.  To make things easier though, you might need to have a separate Commission income account that you only use for commissions that have been deducted from purchases.  Then after the quarter you can just look at that one account to see the total value of commission that has been deducted for the period - and do the correcting entries as per below:

     

    E.g.  If I have earnt (deducted from purchases) $2,000 plus GST from all my suppliers, then the following journal will reverse the negative purchase entry.  Note: before recording make sure the "Display in GST [BAS] Reports as" has Purchases selected.

    Commission Earned on purchases DR $2,000.00 (plus GST)

    Contra Account CR $2,200.00 N-T

     

    Then do another journal, making sure the "Display in GST [BAS] Reports as" has Sales selected to make the correction and correctly record the sale:

    Contra Account DR $2,200.00 N-T

    Commission Earned on purchases CR $2,000.00 (plus GST)

     

    As you can see, the net effect on both these journals is nil - it just moves them from a purchase to a sale on your report.

     

    Hope this is of some help.

SherylBT's avatar
SherylBT
User

Thank you Steven_M , I understand the principal, but it is restrictive.

 

With the volume of Purchases we enter especially in peak season, it is just not an effecient or viable way to enter the commission we receive as income against a ticket purchase as a seperate sale. Especially as the card is either for a 'Supplier 'or a 'Customer' and MYOB won't allow payments to be applied across different types of 'cards'.

 

Is there a chance that MYOB would look at a 'fix' so that it is less restrictive and the user can choose which data they require in the GST Reports? For instance a negative value entered in a purchace against an income account should be considered income?

 

Thank you and I look forward to a reply :)

SherylBT

StephanieLee's avatar
StephanieLee
Experienced Partner
5 years ago

Hi SherylBT, I use the method Steven_M has suggested, having two cards for each supplier (one a customer and one a supplier) and using a "contra" bank account to offset the sale amount of the commissions from the suppliers purchase.  I take your point though, it certainly is a lot of work if there are a large volume of transactions.

 

One work around might be to do just two journals at the end of the BAS reporting period to "correct" the entries in bulk.  To make things easier though, you might need to have a separate Commission income account that you only use for commissions that have been deducted from purchases.  Then after the quarter you can just look at that one account to see the total value of commission that has been deducted for the period - and do the correcting entries as per below:

 

E.g.  If I have earnt (deducted from purchases) $2,000 plus GST from all my suppliers, then the following journal will reverse the negative purchase entry.  Note: before recording make sure the "Display in GST [BAS] Reports as" has Purchases selected.

Commission Earned on purchases DR $2,000.00 (plus GST)

Contra Account CR $2,200.00 N-T

 

Then do another journal, making sure the "Display in GST [BAS] Reports as" has Sales selected to make the correction and correctly record the sale:

Contra Account DR $2,200.00 N-T

Commission Earned on purchases CR $2,000.00 (plus GST)

 

As you can see, the net effect on both these journals is nil - it just moves them from a purchase to a sale on your report.

 

Hope this is of some help.