Calculating GST on invoices
Software: QuickBooks accounting software
Frequently, I had to explain to user, why sometime there is a GST different of ONE cent in QuickBooks invoice comparing to when they were to use Speadsheet calculating their GST amount of the invoice transaction
I found a FAQ on IRAS web site that explained exactly why you having this ONE cent different and how are you going to deal with that.
Note: QuickBooks Asia is using line item method to compute GST amount.
FAQ from IRAS web site stated:
… The total GST payable on all goods and services shown on a tax invoice may be rounded off to the nearest whole cent (i.e. two decimal places). With the discontinuation of the issuing of 1 cent coins, some businesses may round their bills to the nearest 5 cents to facilitate cash payment by their customers. Whether a bill should be rounded up or rounded down to the nearest 5 cents is a business decision.
When a tax invoice contains several line items of standard-rated supplies, the total GST amount on your invoice may be computed based on:
- Summing the GST amount for each line item; or
- Total amount payable (excluding GST) for all line items x 7%
The total GST amount computed may differ due to the method used. Both methods of computing the total GST amount are acceptable so long as you apply the chosen method consistently. …
Read more from IRAS web site: http://iras.gov.sg/irasHome/page04.aspx?id=826