GST change when trade in minus value on sales invoice

[traca1]

Why does the GST portion not change when you misus trade in value against new item. Trade in value is GST FREE, how do I adjust GST portion to allow for Trade in as these are traded by personal customer so they are not GST on amount. But ATO allows you to get GST back when sold. I need to work out how i can make this work so when i do BAS it shows in my GST report. 

[Tracey_H]

Hi @traca1 

Thanks for your post.  This is a situation where I definitely recommend discussing this with your accountant. There are different methods for reporting buying and selling Second-Hand Goods and different rules that will depend on your business.

Please don't hesitate to post again if you have further questions.

If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

[traca1]

Yes i have spoken with accountant and he has asked me to have MYOB to help me set it up. Every time i ask a question the answer is ask your accountant. Really!

[Tracey_H]

Hi @traca1 

I apologise if my response wasn't adequate but as we are not Registered Tax Agents or Accountants we are not permitted to give Tax Advice.  Generally speaking, if there is a GST Free component to a sale you would enter that component as a separate line and change the Tax Code for that line to FRE. GST would then be calculated on the line(s) with the tax code set to GST. 

However, how the GST Credits are reported on your BAS will depend on whether you use the Direct Approach or Global Accounting Method to calculate the GST Credits. The correct tax code to allocate will depend on whether you use the Simpler BAS method to report your BAS or not. The purchase and sale of Second Hand Goods is a complex area and does require the help of an accountant to ensure you are reporting correctly.

Once your accountant has advised how you need to record those transactions and the tax code set up, we are happy to help with how to enter that information in AccountRight.

Please let me know if you need further help.

[traca1]

Hi Tracey, this is not correct, when I change second line to minus trade in @ GST FRE the tax amount stays the same. Example

Sale $10,000 Incl.GST

Minus Trade in - $1,000 Incl.GST

TAX $909.09 (Which is the amount of tax for $10,000)

Total invoice = $9,000 Incl.GST

When I use the FRE GST it calulates GST on $10,000 NOT $9,000 which is the total amount owing!

How can I change MYOB to only calutate GST on total amount owing NOT on the sale less trade-in

and still use the GST FRE 

[traca1]

Sorry typo on first one, the minus trade - in is @ GST FRE. The only way I can reduce GST amount for $9,000 total owing is to change trade-in minus value -$1,000  to GST to reduce GST amount which is not correct as it is a private trade. If total owing is $9,000 then GST should only be $818.18 but MYOB calculates GST only on the $10,000 which is the GST code before trade @ FRE code. Can MYOB be changed to calculate GST only on total amount owing. 

Sale $10,000 Incl.GST

Minus Trade in - $1,000 FRE

TAX $909.09 (Which is the amount of tax for $10,000)

Total invoice = $9,000 Incl.GST (GST portion $909.09)

[Tracey_H]

Hi @traca1 

My understanding of your situation is that you are basically selling one item with GST included in the price and you are buying one item with no GST. If you entered this as two separate transactions you would have:

Enter Sales:

Item $10,000 inc GST

GST amount $909.09

Total invoice $10,000 inc GST

Enter Purchase:

Item $1000 ex GST

GST amount $0.00

Total invoice $1000

Changing the GST amount will mean that you are effectively claiming GST on the item you have purchased/traded-in. I do recommend you clarify this as changing the GST amount could result in you under-reporting your GST obligations.

If I have misunderstood your question please let me know.