Tag Archives: GST

Change of GST rate in QuickBooks Desktop from 7% to 8%

Singapore’s GST rate has scheduled to increase from 7% to 8% from 1 January 2023.

References:
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.

Why?

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

8% GST

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.

new 8% GST

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.

Amend templates

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.

Reckon Accounts

(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.

How to change the tax code (GST code) in a transaction?

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).

Change GST code
Change tax code (GST code)

Override 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 GST code
Override tax code (GST code)

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.

How to change the tax rate in MoneyWorks when the GST rate increase from 7% to 8%?

Singapore is increasing the standard rated GST from 7% to 8% on 1 January 2023 and 8% to 9% from 1 January 2024.

The current standard rated GST (G GST code) rate set in MoneyWorks is 7%, pre-loaded when you first created the document (the company file) with localisation setup as Singapore. You need to update the tax rate for the standard rated GST code to facilitate the rate change on 1 January 2023. 

How to change?

First, launch MoneyWorks accounting software with the document you wish to edit. Then, go to the Show menu and click on Tax Rates. Highlight the tax code (e.g. G GST code) from the Tax Rates windows and click on the Modify button to edit the tax code. Under the Percentage Rate section:

if your current setting is:

  • Rate1: blank
  • Changeover date: blank
  • Rate2: 7.00% (current GST rate)

then, change it to:

  • Rate1: Enter 7.00% (this is the existing rate)
  • Changeover date: enter 1 January 2023
  • Rate2: Enter 8.00% (this will be the new tax rate)
Edit GST rate
Edit GST Rate

That’s it! You have completed the rate change.

Transactions you entered with a standard rated GST (G GST code), with a transaction dated on and after 1 January 2023, will pick up 8%. Whereas transactions dated before 1 January 2023 will be using the old 7% rate.

The tax rate setting is on a per document (company file) basis. You have to go through the process of each company file if you have more than one document.

You may consider engaging a MoneyWorks consultant to make the necessary changes for you and check through the customised forms, reports, import maps, and scripts to ensure the tax rate and tax amount captures correctly.