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TOPIC: Entering Recipient Created Tax Invoices

Entering Recipient Created Tax Invoices 13 years 8 months ago #32

  • Chris
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Hi, I get recipient created tax invoices from my customer and they deduct things like fuel and tyres. I have just been putting their payment through as income but my accountant says this is wrong. How should it be entered?
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Re:Entering Recipient Created Tax Invoices 13 years 8 months ago #33

  • steph
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Hi Chris, thanks for your question. I assume you are in the transport Industry. It is very common practice for contractors in this industry to be issued with RCTI (Recipient Created Tax Invoices) that include deductions.

Your accountant is probably concerned that the supply of your services - and the supply by your customer of fuel etc. - constitute two separate supplies. The ATO does not allow the price of one to be reduced by the other. (Even though your customer may supply you an invoice that shows it like that).

Here is a fact sheet from the ATO which you may find useful - www.ato.gov.au/print.asp?doc=/content/18659.htm

There are two methods I will use to enter these deductions.
    1. The "sale" portion of your invoice is entered in full. Then a purchase is made for the deductions (as noted on the RCTI). The purchase is then contra'd off the sale - with the balance being the payment amount. I prefer to use this method only if it is an "occasional" deduction.
    2. The second method takes a little setting up but will save you time in the long run. You need to setup another tax code for "Negative Sales" Then setup your BAS link so that this GST code goes to G11 (non capital purchases) and that the tax goes to GST Tax Paid. Then you enter the RCTI, show the sale in full, then a negative line which goes to the relative expense (e.g. fuel) using the new GST code you have created.
    This method will result in the sale showing in full at the G1 label (sales) and the purchases showing in full at the G11 label.
I would suggest you try both methods out in the practice company (clearwater) to find out which one works for you.

Here is the MYOB support note which shows step by step how set up for each method. myobaustralia.custhelp.com/cgi-bin/myoba...Vk&p_li=&p_topview=1
Also, feel free to call us if you need any further assistance. We'd be happy to set it up for you.
Stephanie Lee
Imprest Business Services
www.imprest.net.au
Facebook: www.facebook.com/Imprest.Bookkeep
"Professional bookkeeping and administration Services"
Last Edit: 13 years 8 months ago by steph.
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Re:Entering Recipient Created Tax Invoices 13 years 8 months ago #34

  • Chris
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Thanks for that! I didn't realise I had been doing it wrong all this time!!! :P
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