Sales Tax Report - How is "Sales Subject to Tax" Calculated?

barrytbarryt Member Posts: 12

Hi, I have noticed a discrepancy between the Sales subject to Tax value shown in the Sales Tax report. I have the dates set the same for my reporting, July1 to Jun30th. My Income Statement and Income by Customer are correct. The Sales subject to tax doesn't match. I've tried to search down the discrepancy, but cannot find it. So, can you clarify how the "Sales Subject to Tax" int he Tax report is actually calculated?
Thanks!

Comments

  • JordanDJordanD Administrator Posts: 269 admin

    Hey @barryt and thanks for reaching out in the Wave Community! The sales subject to tax section on the Sales Tax Report replies upon a sales tax being applied to the transaction in Wave or added to the item in an invoice. It sounds as though you may not have applied the sales tax to a transaction on your transactions screen for the selected date range. Since you are looking at a 12 month period, I'd recommend filtering your date range down to smaller increments in order to find the transaction that you may have missed and then applying the sales tax. This should then show correctly on your reporting on your Sales Tax Report.

  • barrytbarryt Member Posts: 12

    Thanks for that @JordanD
    Actually, I have found the delta...I raised an invoice with reimbursable expenses, but my error, I accidentally used the GST inclusive figure from the original receipts on the invoice, meaning I invoiced too much (10%). The customer paid the invoice before the error was detected. I agreed with the customer to use the error amount against future expenses.
    So, the issue was trying to correct this....I thought I could follow you credit note examples shown elsewhere. That cleared up reimbursable expenses, but the error amount still shows up in "sales subject to tax". I had expected to be able to reduce the sales subject to tax amount as it was an error, but perhaps it's my misunderstanding (bookkeeping amateur) that once paid, whether it's an error or not, the amount will always be included as 'subject to tax'. Perhaps you could advise if this is correct?
    Thanks
    Barry

    edited September 15, 2019
  • ChelseaKChelseaK Administrator Posts: 241 admin

    Hey @barryt! If I'm understanding your situation correctly, it sounds like what's possible is that you applied a 'non-recoverable' sales tax to your transactions, which is why you're seeing the wrong amounts on your Sales Tax Report. When you created your sales tax, did you set it to non-recoverable? If that's the case, you can create a new recoverable sales tax and apply it to those transactions. This way, those tax values will populate on your Sales Tax Report. This Help Centre article walks you through the steps of creating recoverable versus non-recoverable sales taxes: https://support.waveapps.com/hc/en-us/articles/115004972006-Adding-sales-taxes-
    This article goes into detail about what the differences between recoverable and non-recoverable taxes mean and how these categories affect your Reports: https://support.waveapps.com/hc/en-us/articles/208623426-Taxes-Recoverable-vs-Non-Recoverable

    Does that help clarify what could be going on in your account?

  • barrytbarryt Member Posts: 12

    Hi @ChelseaK , thanks for your response.
    I only have one sales TAX (GST) and it has been set to recoverable from day 1.
    In any case, I now know the 'discrepancy' is due to my explanation above. i.e I mistakenly invoiced too much for reimbursable expenses and the customer paid the invoice, both of us missing the error until recently. We agreed that I would hold the extra amount against future expenses.
    I originally thought I could journal out the error through a credit note type workflow, and I thought (incorrectly I now believe) that I could also reduce my sales subject to tax (until I had a future expense). I am now realising however that I still have the obligation to pay GST to the govt on that amount because I have collected it from the customer.
    So it seems like the system is doing fine and I was wrong in my initial thinking about being able to 'delay' the Sales Tax amount invoice error until I actually used it for a future reimbursable expense.
    Make sense ?
    Thanks
    Barry

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