Tax Setup

During the implementation phase, relevant tax rates are selected and assigned to their matching tax return key point. The base Debtor and Creditor tax rates are also assigned, which form the default.

During operation, "automatic overrides" on the accounts and stock items are then configured as new accounts or stock items are set up.

Company Defaults

The tax system in MYOB Exo Business is customised based on the country selected in the main Company setup screen of Exo Business Config.

This setting determines settings such as the available Tax Return Key Points, as well as cosmetic display information such as the local tax system name (e.g. GST, VAT).

To select the country for the system:

1. Go to Exo Business Config > Company > Company Details.

2. Select the appropriate country in the Country field.

Note: If the country of operation is changed, the default tax rates, and the tax rate settings must also be reviewed and set to the appropriate country settings. Changing the country also alters the available tax return key points, used to configure the integrated tax returns - see the following sections for more detail.

Essential Defaults

Tax Basis

Invoice- or payments-based tax determines how taxation reports are run, and also if extra tax rate functions must be enabled (e.g. whether an overriding tax rate is required on a payment with payments-based tax systems).

The tax basis is set at Exo Business Config > Essential > General Settings.

Note: MYOB Exo Business recommends and supports Invoice-based tax only.

MYOB Exo Business allows for a variety of tax rates to be recorded on each line of an invoice. When a payment is made it is only possible to record a single tax rate. Many functions that are controlled by profile settings (such as tax rate overrides at invoice line level) are suited only for invoice line based taxes.

While it is possible to operate Exo Business and report tax on a payment basis, there are certain logical paradoxes that can occur related to the fact that, by default, Exo Business allows tax to be recorded at a finer level of detail than on a payment basis. For example, care should be taken to disable functionality that promotes individual invoice line level control over tax rates. If multiple tax rates do occur on the same invoice (or in fact to the same customer or supplier), then the only logical method of reconciling tax on a payment basis is to ensure that payments received or made are consistently allocated against invoices, and to produce estimates of tax by reports that calculate the tax content of invoices that are paid during the period.

Note: Some features, such as the Australian BAS Return, cannot support payment-based tax, because fundamental linking is done at an invoice line level.

Debtor Pricing

A setting is available to determine whether the sell pricing of stock is entered as tax inclusive or tax exclusive.

To set the tax inclusive/exclusive setting for Debtor pricing:

1. Go to Exo Business Config > Essential > General Settings.

2. Tick the Tax inclusive pricing for debtors box to state that the sell prices of stock items are entered as tax inclusive; leave the box unticked to state that stock prices are entered as tax exclusive.

Tax Rates

The tax rates are used to ‘group’ the purpose of the tax on an invoice or payment. It is these tax rates that can be reported on for tax returns, and when linked with tax return key points form the basis of the Tax Return systems.

To set up tax rates:

1. Open the tax rates table from Exo Business Config > Essential > Tax Rates.

2. Create a new tax rate by clicking New, or double-click on an existing rate to view and edit.

3. Enter the following information, and click Save to save the tax rate.

   Field	Description
   Tax rate name Tax rate short name	User-friendly names used to reference the tax rate.
   Tax rate %	The percentage rate of tax to be recorded.
   Tax return key point	Used to identify the corresponding field on the Tax Return, using this tax rate as part of the calculation. See Tax Return Key Points below.
   GL control account	Leave the Use Default box ticked to use the GL control account specified in Configuration Assistant > Business Essentials > GL Control Accounts for the debtors and/or creditors tax account; otherwise, untick the box and select a specific GL account for the rate.

To verify that the tax rates have valid key points, and to also check that only valid tax rates exist on debtor, creditor, stock and GL accounts, click the Check Rates button on the toolbar. This will perform a check, and report errors and warnings.

In a new implementation, the suggested default rates for the selected country can be loaded by clicking the Load Rates toolbar button. This button will only be available if the tax rate table is empty, and therefore can only be used if no transactions containing tax rates have been entered in the system.

Troubleshooting

The most common reason for the Check Rates function reporting "null key point values" is because there is no Tax return key point setting for a tax rate. A blank tax rate description will also make a tax rate invalid – if the rate number is shown in the table, it is expected to have a matching tax key point. It is suggested that blank description tax rates be avoided (or deleted), and that all tax rates point to a key point to confirm they have not been ‘mis-configured’. The tax return point “NA – Not recorded on return” could be used if the rate is not to be entered on a tax return.

Other common causes of invalid tax rates include incorrect initial setting of default tax rates, or data imported directly to the database that has not set the tax rate fields. The following fields must be set when importing data:

• dr_accs.taxstatus

• cr_accs.taxstatus

• stock_items.salestaxrate

• stock_items.purchtaxrate

• glaccs.taxstatus

Default Tax Rates

Default tax rates are the lowest level in the hierarchy of tax rate defaults, and will be used on transactions unless specifically set by rates on the account or the stock item, or manually overridden. These default rates could be thought of as the "fall-back" rate if there are no other overrides on the transaction.

To set the default tax rates:

1. Go to Exo Business Config > Essential > General Settings.

2. Select one of the pre-defined Tax Rates for the Base debtor tax rate and Base creditor tax rate.

It is critical that the default tax rates be set correctly. Invalid tax rates may also prevent transaction from being entered.

Tax Return Key Points

Tax Return Key Points are the references to the key points on the country’s tax return system. Tax return key points are pre-defined, relevant to each country, and are viewable but not user-editable. It is the assigning of the key point to a tax rate that controls what will appear on the tax return. More than one tax rate may be added to the same tax return key point.

To view the pre-defined Tax Return Key Points, go to Exo Business Config > Administration > Finance > Tax Return Key Points.

You can double-click on a key point to show more information on the item, such as the full description.

Tax Return Key Points are listed as Creditor and/or Debtor. These properties carry through when assigned to tax rates, and therefore help prevent incorrect tax rates being entered on the wrong transaction types.

"DIS" and "N/A" are special key points that can be used to "disable" a tax rate to prevent data entry, or not display the rate on a tax return.