Should Opening Balance contain tax?
I happened to be looking at the code for some statement templates I have built for people in a VAT/GST environment (which Hong Kong is not). Under the Balance owing amount on the statement, there is an 'Amount includes VAT/GST of:' entry.
The code to get get this is simply Balance Owing/11
I must admit that I don't remember writing this code, however, I don't think that one can do much better.
The problem is that the Opening Balance transaction records only an amount and no tax. Hence although one can add all the tax amounts for the items shown on the statement, the total will be incorrect unless the Opening Balance is zero.
Hard coding a 1/11 is OK only if a) all items are taxed at the same rate, and b) the rate does not change.
I suspect that we should be holding the tax amount in the Opening (and closing) balance transactions.
Note that we really also provide a migration script that updates the historical transactions - thought I do admit that the SQL is beyond me - though maybe its not too bad - the brute force way is to 'for each opening balance transaction, sum the tax on all prior finalised non OB & CB transactions and put it in the tax amount of the OB transaction'.
Regards, Tim G
Re: Should Opening Balance contain tax?
As an afterthought on the above, I suspect that to do a complete job of tax handling, we should also include a tax amount field on the Initial Balance, and Debit & Credit transactions. Regards, Tim G
Re: Should Opening Balance contain tax?
I agree this is a limitation, although I'm not sure how to deal with the case where there has been a part payment for an invoice. What is the tax component on the balance?
In terms of migration, it can be done by using a cursor to iterate over the customer acts. It won't be possible to 100% migrate history that has been imported from another PMS, as the initial balance doesn't have the tax amount.
Re: Should Opening Balance contain tax?
Humm - I agree - somewhat tricky. I just had a look at the statement generated by Reckon Accounts Plus (which I run to handle the accounts for the local neighbourhood centre). Although its Invoices have full GST details, its statements say nothing about the tax.
Hence please forget I ever raised the topic. I think the message is clear - statements should not mention 'of the amount you owe $$$ is tax'.
Regards, Tim G