You can change the GST rate of those affected GST code from 6% to 0% on the effective date that the Malaysia government scrapped off the GST. You should not amend the existing transactions once the rate has changed to prevent QuickBooks from recalculating the GST base on the new GST rate.
It is better to complete the transactions with 6% rated GST before amending the GST rate since QuickBooks does not have a change over date set in the GST profile.
As a QuickBooks administrator, you should lock the account by setting up a closing date and password to prevent other users from editing the existing transactions. Do a backup before the rate change, just in case you need to roll back after rate changed; and an integrity check (Rebuild and Verify Data) before and after rate changed.
For users who are using an older version of QuickBooks (especially Reckon QuickBooks version) may consider adding a new GST code than replacing the current rate. There is a risk that the old rate may get replaced when migrating to the latest version.
Malaysia new government has decided to scrap GST (Goods and Services Tax) from June 2018; the standard rated GST is going to reduce from the 6% to 0%. What are those setting which you need to change in MoneyWorks accounting system?
Unlike some other software which requires you to create a new GST code to cater for the rate change, MoneyWorks allows you to set a new GST rate at a specified changeover date within the tax code profile. First, change the default tax rate (Rate 2) of tax code such as G GST Code (for SR and TX GST code) from 6% to 0%, then enter the old rate (6%) in Rate 1 field and set the changeover date to 1 June 2018.
Once the tax rate changed, any transaction which uses the amended GST Code will be 0% automatically.
Go through the list of GST code from the Tax Rate table (under the Show menu) and amend those codes which require changes. You may have to consult your accountant or tax department as the changeover could be complicated especially regards to those bad debts recovered or capital goods acquisition/disposal transactions.
You are still required to process the finalisation of GST at the end of each GST cycle although the rate has changed from 6% to 0% as the GST system is still in place and MoneyWorks is still actively tracking the GST of each transaction.
The newer version of MoneyWorks is v8, contact us if you require upgrading your existing version.
Software: MoneyWorks accounting software
For purchases made from a GST register trader in foreign currencies, the supplier has to reflect the GST payable on the invoice in Singapore dollars with an approved exchange rate. You, the buyer, should claim input tax based on Singapore dollar amounts shown on the tax invoice instead of conversion based on your in-house exchange rate.
For example, your in-house exchange rate is 1SGD:0.7400USD, but received a Bill from a supplier at a rate of 1SGD:0.7431USD. Then, you should record the Bill (Purchase Invoice) with an exchange rate of 1SGD:0.7431USD instead of using the system rate 1SGD:0.7400USD.
Assuming the GST amount of a Purchase Invoice is US$700. It will be $$945.95 (700/0.7400) if recorded based on system exchange rare of 1SGD:0.7400USD and S$942.00 if the exchange rate has changed to 1SGD:0.7431USD.
As you can see from the above illustration when the exchange rate changed, the GST amount in Singapore dollar changed.
Click the exchange rate button on top of the purchase invoice to change the exchange rate of a transaction in MoneyWorks accounting software.
Then, uncheck the ‘Use system rate at posting time’ checkbox from the Currency Rate wizard and amend the exchange rate for the transaction.
You should check with your accountant or IRAS if you have doubt on GST transactions.