Tax in Australia and New Zealand

You can set up the MYOB Advanced tax system to accommodate a wide variety of scenarios; however, when operating in Australia or New Zealand, the set of possible taxation scenarios is relatively small. MYOB Advanced is pre-installed with a tax system that meets the needs of operating in Australia or New Zealand. When creating a new company instance via the MYOB Advanced Configuration Wizard, the selection you make in the Insert Data column on the Company Setup screen affects the tax system that will be set up:
  • If you select "AU", the company will be set up with a tax system that applies to trading in Australia.
  • If you select "NZ", the company will be set up with tax system that applies to trading in New Zealand.
The entities in the tax system that are set up by default are discussed below.

Tax Agencies

The tax agency that taxes are paid to must be specified. MYOB Advanced is set up with a single tax agency: the Australian Tax Office (ATO) for Australian companies, and the Inland Revenue Department (IRD) for New Zealand companies. Tax agencies appear in the MYOB Advanced system as Vendors that have the Supplier is Tax Agency option selected.

Tax Codes

Tax codes specify the tax rate to be applied to each line in a transaction. Tax zones and tax groups specify sets of tax codes applicable to that zone or category. The tax code (or tax codes) that apply to a transaction line are determined by the intersection of the tax zone and tax code that applies to the line, i.e. only tax codes that are a member of the relevant tax zone and the relevant tax category will be applied to the line.

Tax Zones

Tax zones define taxes that are applied based on the geographical location of the transaction. Tax zones can be set up for as many locations as required, but for trading in Australia and New Zealand only two tax zones are need: a DOMESTIC zone for local dealing (which will be subject to GST) and OVERSEAS zone for international dealing (which will not incur GST). These zones are created by default when a new company is installed. In both countries, the DOMESTIC tax zone contains all GST-inclusive tax codes, while the OVERSEAS tax zone contains all GST-exempt tax codes.

Tax Categories

Tax categories define taxes that apply based on the kind of good or service being sold. In New Zealand, all goods and services are subject to GST, therefore a single DEFAULT category is all that is required; this category contains all of the basic tax codes, GST-inclusive and GST-exempt.

Note:

The NZ tax system also includes tax codes relating to GST adjustments. These codes are not included in the DEFAULT tax category; they are used internally for calculating GST adjustments.

In Australia, where some goods are GST-exempt, multiple tax categories are required to ensure that goods and services are taxed correctly and, for goods and services that are GST-exempt, to record the reason for the exemption. When setting up inventory, be sure to assign all items to the appropriate category:

Category Description
DEFAULT This is a default category for goods or services that do not fit into any other category.
CAPPURCH This category applies to capital purchases. All amounts relating to this category appear in box G10 on the BAS.
GSTFREE This category applies to GST-free sales that do not fit into any other category. All amounts relating to this category appear in box G3 on the BAS.
INPUTCAP This category applies to input taxed capital sales. All amounts relating to this category appear in box G13 on the BAS.
INPUTNOCAP This category applies to input taxed non-capital sales. All amounts relating to this category appear in box G13 on the BAS.
INPUTSALES This category applies to input taxed sales. All amounts relating to this category appear in box G4 on the BAS.
NOGSTCAP This category applies to capital purchases without GST in the prices. All amounts relating to this category appear in box G14 on the BAS.
NOGSTNOCAP This category applies to non-capital purchases without GST in the prices. All amounts relating to this category appear in box G14 on the BAS.
PRIVCAP This category applies to estimated capital purchases for private use or not income tax deductible. All amounts relating to this category appear in box G15 on the BAS.
PRIVNOCAP This category applies to estimated non-capital purchases for private use or not income tax deductible. All amounts relating to this category appear in box G15 on the BAS.

GST Reporting

See the ATO website for more information on the kinds of goods and services that are and are not exempt from GST.

MYOB Advanced includes the following GST reports:

Report Lines and Report Groups are used to populate the fields of the GST and BAS reports. In both countries, these are set up automatically.
CAUTION:

Report Lines and Report Groups can be customised; however, this should only be done at the instructions of MYOB. Misconfiguring these options will result in the GST reports calculating incorrect data.