21-06-2010 02:25 PM
How do you calculate the input tax credit for car insurance and how is it entered into MYOB?
The car insurance policy states;
" The annual premium or each monthly instalment, when paid, will be the amount subject to a claim for Input Tax Credit purposes."
Annual Premium: $534.62 Monthly Instalment $59.30 (including GST& Stamp Duty)
Please help, very confused...
Solved! Go to Solution.
22-06-2010 06:12 AM
If the vehicle is owned by the business and used for business then it is likely that you can claim 100% ITC, check this out on your paperwork, it should tell you somewhere there.
If you are paying your insurance monthly then the easiest way to account for the GST is to enter a Bill in the Purchases Register.
Enter 2 lines for your insurance - the first is the premium incl GST and brokerage fees incl GST (if applicable) TAX CODE GST; the second is the Stamp Duty TAX CODE N-T.
Then each month you simple use the Pay Bills function to record the monthly payment against the Bill and MYOB will calculate the GST applicable for each month.
This method will suit both Cash or Accrual Reporting for BAS Preparations and is assumed you have 100%ITC.
Get back to me if you do not have 100%ITC
22-06-2010 10:18 PM
I have one policy that states;
"You have told us you are entitled to claim an ITC of 0.00% of the GST paid on this premium".
The hire purchase documents are in the name of the client but trading as the company with the their ABN.
And the other
The hire purchase is in the name of the client but trading as the company. The insurance policy is in the name of the client, but with vehicle usage as - Business on the car insurance policy. I can't find the ITC % amount on the policy at all.
The insurance policies are all so different, should I confirm the % amount with the client?
23-06-2010 06:27 AM
I would be double checking with the Accountant to ensure that you are entitled to claim the GST component of these and once confirmed I would then be getting on to the insurance company to have the ITC percentage changed to the figure quoted by the Accountant.
28-06-2010 03:13 PM
Thanks, I checked with the accountant. He said the ITC should be 60% and it's been changed with the insurance company. The monthly instalment is $66.36
Is the entry;
Dr - Motor Insurance (Expense) $24.13 GST
Dr - Motor Insurance (Expense) $39.83 INP
Dr - GST Paid (Liab) $2.41
Cr - Bank Account (Asset)
29-06-2010 06:11 AM
You are looking at general journal transaction there, what I would be doing is recording a spend money from your account where the money is being deducted and recording on 2 lines as:
Motor Insurance (expense) 24.13 GST
Motor Insurance (expense) 39.83 N-T (this should be the stamp duty)
Motor Insurance (expense) ??? INP (Not claimable GST portion)
make sure your transaction has no tick in the Includes GST box on the top right hand side.
20-08-2010 11:20 PM
My situation is a bit different to Fiona, i paid $1121 (incl GST and Stamp duty) for AAMI car insurance,
Amount of GST payable: $92.64
Amount of Stamp duty: $101.91
Amount Subject to GST: $926.40
Input tax credit is 80%.
In my point of view, the first step is set up an asset account called prepayments as i paid for 12 months insurance. And every month for 12 months that debits insurance expense and credits prepayments. I tried to record a spend money for those transactions from my account. And i really dont have a clue how to do that, please help!
21-08-2010 07:21 AM
For you to able to do this monthly transaction as a spend money your Prepayments account would need to be setup as a Bank Account, alternatively you use a general journal entry that is available on your Accounts Module screen.
You can contact me privately if you wish more detailed help with this issue.
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