Hi all
Hoping someone might be able to help with my question/problem.
As a supplier of professional services in New Zealand, I have recently started a role where I complete a timesheet for a Mon-Fri period, then in the middle of the following week receive a buyer created tax invoice along with the associated payment from the buyer.
Part of the overall calculation includes a buyer 'service fee', that is a percentage of the gross amount, and this is deducted before determining earnings that are subject to income tax.
The service fee itself is made up of the base service fee plus GST.
So, my question/issue is - I need to find out how to deal with the service fee in MYOB (and I need to deal with the parts of this that are the base service fee and that are the GST).
I'll explain the situation with an example (using fictional amounts that demonstrate the issue):
Lets say I work 4 hours at $10 per hour so my gross earning is $40.
The service fee is 0.5% ('half a percent'), relative to the gross earning, so is 20 cents (so the base service fee is approx 17.4 cents and the GST is 2.6 cents).
The service fee of 20 cents is deducted from the gross earning of $40, leaving $39.80 which is then subject to income tax.
The buyer withholds 25% PAYG relative to the $39.80 amount, so keeps $9.95 that they forward to the Government later on my behalf, and so they pay me the remainder of $29.85.
The buyer also pays me 15% GST on the gross earning of $40, so pays me another $6 (so in total I receive $29.85 + $6 = $35.85 from the buyer).
From the $35.85 I set aside the $6 GST to pay to the Government later.
From the remaining $29.85 I also set aside several small amounts to pay remaining income tax owed and ACC insurance fees later.
Lets say this leaves me with approx $25 in the hand as an owner drawing.
As I am GST registered, I can offset the GST I have paid against the GST I have collected before paying the remaining amount to the Government.
So as raised above, given the buyer has calculated their service fee against the gross amount, where I have paid the base service fee and paid GST, how do I handle this service fee in MYOB so that it appears as a payment I've made for the 'service' I've received, and indeed how do I account for the base service fee of 17.4 cents and GST of 2.6 cents in MYOB, so that later when I come to do my GST return the 2.6 cents can be deducted from GST I've collected etc?
Note up until this role I have always raised invoices to buyers myself, and so have had most of the situation as above, except for this service fee item. I have bank feeds setup. As previous buyers have still withheld PAYG I have been creating Take Payments so that I can reconcile the amount the buyer paid to me and the amount the buyer paid to the Government on my behalf, and I have been transferring the GST collected amounts, remaining income tax amounts and ACC insurance amounts to a savings account so normally get transactions in MYOB that I can allocate all these parts to. If I have bought services I have done this myself so again have received bank feeds into MYOB that I can allocate purchases against.
But this new setup of the buyer deducting the service fee before income tax, and so on, has me stumped as to what to do in MYOB.
Note I've seen this post from a while back, but not sure if it helps - https://community.myob.com/t5/MYOB-Essentials-Accounting/Essentials-Recipient-Created-Tax-Invoice-Su... ?
Apologies for the long post, but I hope someone can give me a hand on what I need to do.
Thanks so much for your help in advance!
Kind regards,
Tony
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