sql-ledger-users

[SL] Incorrect Tax Reports

[David J <ja...@in...>]

Hello list
We continue to have significant bother with cash-basis tax
reports.  
In Australia, the existing reports are incorrect because
part-payments are ignored.  
See example at end.
Dieter seems not yet convinced that these reports are wrong,
so I'm interested to know of any other places in the world
that applies cash-basis tax-reporting the same as we do.
Hopefully then Dieter may be interested to reconsider the
problem, and seek a better solution.
I believe New Zealand is the same.  Can someone confirm ? 
Anywhere else ?
Thanks
David J

PS.  If you use Cash Basis tax reporting in Australia, you
have been warned !!

Example.  Remember its cash basis tax reporting.
On 15 February we invoiced a customer for $1,000 plus GST of
$100, total $1,100.
On 14 March the customer paid $550 towards the invoice. We
applied the part payment correctly. At the end of March
there is $550 still owing on the account.
Under Australian GST rules, we collected GST of $50 from
this customer during March, and we now owe that to the Tax
Office. 
But SQL-L incorrectly reports the GST collected as zero,
until the invoice has been paid in full !
(If we report zero we could get into serious trouble with
our Tax Office.)
The remaining $550 was received in April, and the final $50
of GST should be reported and paid to the Tax Office
sometime later. But the SQL-L report for April, Cash Basis,
now shows $100 of GST collected. The SQL-L report is again
incorrect.
Of course this issue applies to both AP and AR partly paid
invoices.

Reference
http://www.ato.gov.au/businesses/content.asp?doc=/content/71900.htm

Re: [SL] Incorrect Tax Reports

[George O. <geo...@ya...>]

On Tuesday 29 May 2007, David J wrote:
> Hello list
> We continue to have significant bother with cash-basis tax
> reports.
> In Australia, the existing reports are incorrect because
> part-payments are ignored.
> See example at end.
> Dieter seems not yet convinced that these reports are wrong,
> so I'm interested to know of any other places in the world
> that applies cash-basis tax-reporting the same as we do.
> Hopefully then Dieter may be interested to reconsider the
> problem, and seek a better solution.
> I believe New Zealand is the same.  Can someone confirm ?
> Anywhere else ?
> Thanks
> David J
>
> PS.  If you use Cash Basis tax reporting in Australia, you
> have been warned !!
>
> Example.  Remember its cash basis tax reporting.
> On 15 February we invoiced a customer for $1,000 plus GST of
> $100, total $1,100.
> On 14 March the customer paid $550 towards the invoice. We
> applied the part payment correctly. At the end of March
> there is $550 still owing on the account.
> Under Australian GST rules, we collected GST of $50 from
> this customer during March, and we now owe that to the Tax
> Office.
> But SQL-L incorrectly reports the GST collected as zero,
> until the invoice has been paid in full !
> (If we report zero we could get into serious trouble with
> our Tax Office.)
> The remaining $550 was received in April, and the final $50
> of GST should be reported and paid to the Tax Office
> sometime later. But the SQL-L report for April, Cash Basis,
> now shows $100 of GST collected. The SQL-L report is again
> incorrect.
> Of course this issue applies to both AP and AR partly paid
> invoices.


The way SL handles cash accounting is correct.
This problem has been discussed many times on this list. I myself had lots of 
problems at the beginning, few years ago until I realized it was me who was 
causing all problems. 
Cash based accounting means that all the money coming in should be taxed at 
the time of payment and payment should be processed at the time of sale. It 
is that simple. That also means that if you are registered for cash based 
accounting YOU SHOULD NOT OFFER ACCOUNTS to your customers. If you do then it 
is your own risk that you are taking and as far as ATO is concerned it is not 
allowed.
To avoid problems with SL all invoices and full payments must be within 
selected tax period. That means if you want to report GST for the first 
quarter make sure that all invoices are open and closed with full payments 
within that period. You will not have any problems.
In Australia you can also choose to report GST anually which is what I do. 
That solves all the problems.


-- 
George
AUSTRALIA
http://www.okstudio.com.au

Re: [SL] Incorrect Tax Reports

[Joseph A. M. <ja...@jo...>]

-----BEGIN PGP SIGNED MESSAGE-----
Hash: SHA1

My two cents - As a CPA in the U.S. I would agree that the cash basis
reporting doesn't work as perhaps it should. Other accounting programs
that cover a similar market, ie. quickbooks allows the user to track
receivables and payables but yet report on a cash basis. While the
consumption tax ( i.e. Sales tax) works differently in New York State
because it is on the accrual basis - It would still have a vary similar
reporting problem for accrual basis taxpayers.  As sql-ledger matures
for the international marketplace hopefully it will factor in local
taxation differences.

It would be nice to know approximately how many accountants, CPAs,
chartered accountants are using the program for their clients. I only
use it for one small non-profit with very little activity as it would
not meet the needs of most of my clients. I look forward to the day that
it could replace our citrix  and quickbooks licenses and save us some
money. Clients that can use SqL ledger would most likely be a size that
would file on the cash basis for U.S. Income Tax purposes. Since in the
U.S. ( and I would guess all over the world ) the General Ledger is the
"bible" in terms of books and records but yet SQL ledger fails in this
key area.

David, while only entering cash transactions might solve your problem it
does create other problems such as not being able to track receivables
and payables. I can't think of another workaround at this time.

Joe

www.joemaffia.com



David J wrote:
> Hello list
> We continue to have significant bother with cash-basis tax
> reports. =

> In Australia, the existing reports are incorrect because
> part-payments are ignored. =

> See example at end.
> Dieter seems not yet convinced that these reports are wrong,
> so I'm interested to know of any other places in the world
> that applies cash-basis tax-reporting the same as we do.
> Hopefully then Dieter may be interested to reconsider the
> problem, and seek a better solution.
> I believe New Zealand is the same.  Can someone confirm ?
> Anywhere else ?
> Thanks
> David J
>
> PS.  If you use Cash Basis tax reporting in Australia, you
> have been warned !!
>
> Example.  Remember its cash basis tax reporting.
> On 15 February we invoiced a customer for $1,000 plus GST of
> $100, total $1,100.
> On 14 March the customer paid $550 towards the invoice. We
> applied the part payment correctly. At the end of March
> there is $550 still owing on the account.
> Under Australian GST rules, we collected GST of $50 from
> this customer during March, and we now owe that to the Tax
> Office.
> But SQL-L incorrectly reports the GST collected as zero,
> until the invoice has been paid in full !
> (If we report zero we could get into serious trouble with
> our Tax Office.)
> The remaining $550 was received in April, and the final $50
> of GST should be reported and paid to the Tax Office
> sometime later. But the SQL-L report for April, Cash Basis,
> now shows $100 of GST collected. The SQL-L report is again
> incorrect.
> Of course this issue applies to both AP and AR partly paid
> invoices.
>
> Reference
> http://www.ato.gov.au/businesses/content.asp?doc=3D/content/71900.htm
>
> -------------------------------------------------------------------------
> This SF.net email is sponsored by DB2 Express
> Download DB2 Express C - the FREE version of DB2 express and take
> control of your XML. No limits. Just data. Click to get it now.
> http://sourceforge.net/powerbar/db2/
> _______________________________________________
> sql-ledger-users mailing list
> sql...@li...
> https://lists.sourceforge.net/lists/listinfo/sql-ledger-users
>
-----BEGIN PGP SIGNATURE-----
Version: GnuPG v1.4.5 (GNU/Linux)
Comment: Using GnuPG with SUSE - http://enigmail.mozdev.org

iD8DBQFGW5Wa1Zo2InkR90QRArdlAKCoW/1Tit88oHZHpF4cWeQG7vftjgCeP7mP
jeZogKcfscUjlBSi9DXMjk8=3D
=3Dz20Q
-----END PGP SIGNATURE-----

Re: [SL] Incorrect Tax Reports

[Paul T. <pt...@wa...>]

Joseph A. Maffia schreef:
> -----BEGIN PGP SIGNED MESSAGE-----
> Hash: SHA1
>
> My two cents - As a CPA in the U.S. I would agree that the cash basis
> reporting doesn't work as perhaps it should. Other accounting programs
> that cover a similar market, ie. quickbooks allows the user to track
> receivables and payables but yet report on a cash basis. While the
> consumption tax ( i.e. Sales tax) works differently in New York State
> because it is on the accrual basis - It would still have a vary similar
> reporting problem for accrual basis taxpayers.  As sql-ledger matures
> for the international marketplace hopefully it will factor in local
> taxation differences.
>
> It would be nice to know approximately how many accountants, CPAs,
> chartered accountants are using the program for their clients. I only
> use it for one small non-profit with very little activity as it would
> not meet the needs of most of my clients. I look forward to the day that
> it could replace our citrix  and quickbooks licenses and save us some
> money. Clients that can use SqL ledger would most likely be a size that
> would file on the cash basis for U.S. Income Tax purposes. Since in the
> U.S. ( and I would guess all over the world ) the General Ledger is the
> "bible" in terms of books and records but yet SQL ledger fails in this
> key area.
>
> David, while only entering cash transactions might solve your problem it
> does create other problems such as not being able to track receivables
> and payables. I can't think of another workaround at this time.
>
> Joe
>
> www.joemaffia.com
>
>
>   
Well spoken!

I might be able to suggest an optional workaround: invoice (sell) in x 
parts, x being the number of payments agreed upon.
So in the 2 times 550 dollar example, sell one half of the goods in 
march and  apply the payment directly (cash transaction).
The other half is invoiced (AR transaction) with a payment term of 30 
days. The receipt is applied in april.

My gut feeling is that this should take care of both receivable tracking 
and tax report on cash basis?

HtH,
Paul

Re: [SL] Incorrect Tax Reports

[George O. <geo...@ya...>]

On Tuesday 29 May 2007, Paul Tammes wrote:
> Joseph A. Maffia schreef:
> > -----BEGIN PGP SIGNED MESSAGE-----
> > Hash: SHA1
> >
> > My two cents - As a CPA in the U.S. I would agree that the cash basis
> > reporting doesn't work as perhaps it should. Other accounting programs
> > that cover a similar market, ie. quickbooks allows the user to track
> > receivables and payables but yet report on a cash basis. While the
> > consumption tax ( i.e. Sales tax) works differently in New York State
> > because it is on the accrual basis - It would still have a vary similar
> > reporting problem for accrual basis taxpayers.  As sql-ledger matures
> > for the international marketplace hopefully it will factor in local
> > taxation differences.
> >
> > It would be nice to know approximately how many accountants, CPAs,
> > chartered accountants are using the program for their clients. I only
> > use it for one small non-profit with very little activity as it would
> > not meet the needs of most of my clients. I look forward to the day that
> > it could replace our citrix  and quickbooks licenses and save us some
> > money. Clients that can use SqL ledger would most likely be a size that
> > would file on the cash basis for U.S. Income Tax purposes. Since in the
> > U.S. ( and I would guess all over the world ) the General Ledger is the
> > "bible" in terms of books and records but yet SQL ledger fails in this
> > key area.
> >
> > David, while only entering cash transactions might solve your problem it
> > does create other problems such as not being able to track receivables
> > and payables. I can't think of another workaround at this time.
> >
> > Joe
> >
> > www.joemaffia.com
>
> Well spoken!
>
> I might be able to suggest an optional workaround: invoice (sell) in x
> parts, x being the number of payments agreed upon.
> So in the 2 times 550 dollar example, sell one half of the goods in
> march and  apply the payment directly (cash transaction).
> The other half is invoiced (AR transaction) with a payment term of 30
> days. The receipt is applied in april.
>
> My gut feeling is that this should take care of both receivable tracking
> and tax report on cash basis?
>
> HtH,
> Paul

That is what I do when I run in to trouble at the end of financial year. I 
only have to report GST once per year. But David is right when he says that 
to do this every quarter or even every month would be ridiculous. You would 
have to spend last few days of every month splitting all unpaid invoices. 
Think about all human errors that can happen.



-- 
George
AUSTRALIA
http://www.okstudio.com.au