When entering a transaction (e.g. a purchase invoice) in MoneyWorks, the tax code used in the detail line follows the tax code set in the account used. For example, the transaction tax code will be OP (Out-of-Scope) if the tax code for the account (e.g. prepayment account) is OP tax code.
You can change the tax code (under the TC column) when entering the transaction, such as changing OP to G tax code (except * tax code). Usually, non-taxable account such as the bank, shareholder funds, accounts receivable and accounts payable use * tax code. If you have an account with a * tax code in a transaction and wish to change, you got to do it at the account level instead (From the accounts list, highlight the account you want to amend and click on the Modify button to edit the tax code).
If there is any tax code set in the name profile (Supplier or customer), the tax code set in the name profile will override the tax code in the account. Assuming the tax code for the prepayment account is OP, and the tax code in the supplier is G tax code. When entering a transaction for the supplier with the prepayment account, MoneyWorks will pick up the G tax code instead of OP to calculate the GST (Goods and Services Tax).
Override tax code helps speed up data entry and reduce entry errors. For example, you have tagged the G tax code (standard rate GST) for the revenue account, and the export customer has a Z tax code (zero-rated GST). The invoice will remain as G tax code for the local customer but change to Z tax code when invoicing the export customer.
The list of tax codes is available in MoneyWorks’ tax rate table (access from the Show menu).
**Please refer to the IRAS GST e-tax guide for more information.