How do you record a GST paid in QuickBooks Online by a forwarder acting on your behalf?
When importing goods into Singapore, you must pay the GST (Goods and Services Tax) to Singapore Customs if the overseas supplier is not an IRAS GST-registered trader. If you do not have an account with Customs, the forwarder could have acted on your behalf.
GST Input is an asset, the amount of tax you pay to the supplier when you make a purchase; you will get the tax refund later when you file your taxes. On the other hand, GST Output is a liability, the tax amount you collected from the customer when sales took place. The net between the GST Output and GST Input will be the tax amount payable or claimable from IRAS.
Record the GST paid in QuickBooks Online
Assuming you imported $100,000 worth of goods into Singapore, the forwarder paid the GST (9%) on your behalf.
There are three GST accounts in QuickBooks Online (QBO): GST Control (current liability), GST Suspense (current liability), and GST Expenses account. The GST Control account captures the GST Input and GST Output and later reclassifies it to the GST Suspense account when you file your taxes.
Overseas supplier bill
First, you enter the bill of $100,000 from the overseas supplier with an NR GST or OP code, whichever you prefer. NR is for a non-GST registered trader, and OP is for an out-of-scope purchase, excluded from GST Form 5. The bill from the overseas supplier debits the Cost of Goods Sold (or inventory assets if you enter it as a product) and credits the accounts payable.
The forwarder bill
Next, enter the forwarder bill you have received for the GST paid acting on your behalf. For the first row of the bill’s category section, you use Cost of Goods Sold (or any preferred expense account) with $100,000 and a 9% Input GST code (could be IM 9% or TX 9%, depending on the accountant). IM is import GST, and TX is standard input GST; both GST codes are 9% rated, and you claim the tax paid in GST form 5. The first row reflects the taxable amount and tax; it debits the Cost of Good Sold $100,000, debits the GST Control $9,000, and credits the Accounts Payable $109,000.
On the second row of the bill’s category section, you again use the Cost of Goods Sold account but enter a negative ($100,000) amount instead and an OP GST code. This line reverses the Cost of Goods Sold from the bill. It debits the Accounts Payable and credits the Cost of Goods Sold $100,000.
Let’s look at the ledger
For the overseas supplier bill:
Debit Cost of Goods Sold $100,000
Credit Accounts payable $100,000
For the forwarder bill:
Debit Cost of Goods Sold $100,000 (shown in Form 5)
Debit GST Control $9,000 (shown in Form 5)
Credit Cost of Goods Sold $100,000 (reversed the additional COGS)
Credit Account payable $9,000
You do a pay bill to the overseas supplier and the forwarder accordingly when due.