Singapore’s GST rate has scheduled to increase from 7% to 8% from 1 January 2023.
IRAS | Overview of GST Rate Change
QuickBooks Desktop is an accounting software installed on the computer desktop (Windows) following US, UK or Canadian tax; therefore, it is likely that it will not get any patches to update when there is a change in the Singapore GST rate. Although you are not getting an auto-update on the tax rate, no worries; changing the tax rate in QuickBooks Desktop is not too complicated.
Edit or add new?
Yes, editing the tax rate of the existing tax item is possible, which requires less effort, but adding a new set of 8% GST items to your QuickBooks Desktop file is preferred.
During the transition period, you may require using the 7% for some transactions instead of the new 8%; therefore, adding a new GST item with the new rate may be a better option than changing the GST rate of the existing GST item from 7% to 8%.
Besides, QuickBooks does not have a “posting” feature that permanently “locks” the transactions. It will update to the new rate if the user has accidentally amended past transactions. For example, a salesperson may amend and reprint an invoice when the product or quantity entered was incorrect or changed, and the invoice gets updated with the new rate when saved.
You, as an administrator, decide whether to edit or add a set of GST codes and items to QuickBooks Desktop. Below are steps to recap how to set up a new rate in QuickBooks if you opt for the latter.
Set up GST code and GST items
You need to select the appropriate GST code when entering a transaction (e.g. Sales Invoice or Bill), and the GST amount calculates based on the rate set in the GST item, which links to the GST code used. The GST amount (either input or output GST) will then tag to the Tax Agency (e.g. Comptroller of Goods and Services Tax or IRAS) for printing the GST report and update the appropriate GST ledger.
Transaction > GST Code > GST item (with GST rate) > Tax Agency > GST Reports/GST Ledger.
You should have the tax agency and GST ledger account set up in QuickBooks if you are already a GST-registered trader. You only need to add the new GST code and items and link it to the existing tax agency.
The GST item (Sales Tax Item) is in the QuickBooks item list, which you can find under the lists menu. Below is an example of how to set up a GST item for the input tax.
GST input tax:
Sales Tax Name: 8P (you can have a different tax name)
Description: 8% GST input tax
Tax Rate (%) or Amt: 8.0% (you need to have the % symbol; if not, it will be 8.0 dollars)
Tax Agency: Comptroller of Goods and Services Tax
Sales Tax Return Line: Tax on Purchases
I am using “8P” as the GST item code for input tax in the above example (your item code may differ from mine). Link the Sales Tax Return Line to the Tax on Purchases to show the tax amount in the Tax on Purchases section (input GST) of the Tax Detail Report. Save the GST input tax item and add a GST output item for the 8% to the list.
Next, link the two newly created GST items to the GST code. The GST code list, which is the Sales Tax Code list in QuickBooks, is under the lists menu. In the below example, I am using “8” as the GST code and linking to the “8P” and “8S” tax items, which are my input and output tax items.
That’s it. You can now use the new GST code in the transaction.
Update products and name list
The items (and maybe also the customers and suppliers) are in the old 7% GST rate, which requires updating. Manually change them if you do not have many, or use the “add/edit multiple list entry” feature in QuickBooks to edit the tax code. Consider using a third-party importing and exporting add-on tool (such as Transaction Pro) if you have a complex requirement.
BACKUP before importing data into the QuickBooks file! And do database maintenance after importing data.
You do not need to change the formula in the template (e.g. Sales Invoice or Purchase Order form), but if you had hard-coded field labels such as “GST @ 7%” after the subtotal field or in the memo, you need to update them. Consider having a new set of templates for 8% rated GST instead, in case you need to reprint the invoices.
Don’t forget to save a backup of the QuickBooks file before changes. Engage a QuickBooks consultant to help make the necessary changes if you are unsure or have no time.
(for Reckon Accounts users)
Reckon Accounts (formerly known as QuickBooks Australian version or QuickBooks Asia version) follow the Australian tax system. Setting up a new tax rate is slightly different from Intuit QuickBooks, but the relationship between the tax code, tax items, tax agency, and the tax ledger account is similar. You may engage a Reckon Accounts consultant to help make the necessary tax changes if required.