Setting up Tax codes

Tax codes are used to track Tax paid to or by your business. Each Tax code represents a particular type of Tax, and is used to calculate Tax on your transactions.

Your company file has an extensive list of Tax codes that can be used in a variety of situations—for example, when doing business with overseas customers, when tracking capital acquisitions and so on. In addition, you can create an unlimited number of Tax codes.

To create a Tax code

1	Go to the Lists menu and choose Tax Codes. A list of all the Tax codes that are already set up for you is displayed.

2	Click New. The Tax Code Information window appears.

3	In the Tax Code field, type a code (up to five characters) for the new tax and press Tab.

4	Complete the other fields in this window.



A	Enter a description, type and rate.
B	If the Tax code is zero-rated, select the Tax Code is Reported on Tax Return option. Deselect this option for exempt tax codes.
C	Select the linked account for Tax collected and another for Tax paid. These fields are only available for some Tax types. Select a card, if applicable.

To assign Tax codes to accounts

You can assign a Tax code to any account in your accounts list. The Tax code you assign will appear as the default Tax code when you post a transaction to this account.

For example, you have assigned the standard code (S) to your electricity expense account. When you write a cheque to settle your electricity bill in the Spend Money window and allocate it to this account, the standard code will appear in this window by default.

You can allocate a Tax code to an account in the Details view of the Edit Accounts window. You can display this window by going to the Accounts command centre, clicking Accounts List and clicking the zoom arrow (

) next to the required account in the list.

To assign Tax codes to items

When you set up your items, you must assign a Tax code to each of them.

You can assign a Tax code to be used when you sell an item and a Tax code to be used when you buy an item. That Tax code will appear as the default in sales and purchases of that item unless you have specified the customer’s or supplier’s Tax code to be used instead.

Tax codes are assigned to items in the Buying and Selling tabs of the Item Information window. For more information, see ‘Creating items’.

To assign Tax codes to cards

You can define a default Tax code for a customer or supplier. You only need to specify a default Tax code if the customer’s or supplier’s Tax status takes precedence over that of the item or service being sold or purchased. For example, if a customer is one to whom you only ever make zero-rated export sales, you should assign the zero-rated Tax code (Z) to that customer’s card.

When you create a quote, order or invoice, the Tax code assigned to the customer will be used as the default. This Tax code will override the item’s Tax code in an item sale, and the allocation account’s Tax code in a non-item sale. Tax codes are assigned to customers in the Selling Details tab of their Card Information window.

Make sure you select the Use Customer’s Tax Code option. (If this option is not selected, the customer’s Tax code will not be used, even if one has been assigned.)

Make sure you select the Use Supplier’s Tax Code option. (If this option is not selected, the supplier’s Tax code will not be used, even if one has been assigned.

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