Tax rate on Projects and Sub Projects

In most cases the tax rate on sub projects will be set to GST Applicable.  There is an option for GST Free and this explained below.

Getting Started

Setup required before use	Who can use it?	Where is it?
Set default tax code for sub projects	Assistant project manager Project Manager Director Administrator System Administrator	Projects > Project Plan > Sub Projects Projects > Sub Projects

GST Applicable

Applicable essentially means, when you raise an invoice tax will be calculated automatically. So even though the transactions applied to a sub project may exclude GST, the system is setting an overall rule. 

Example

I have 2 expenses i need to add to the project.  One is a council fee which is a GST free expense supplied by Council.  The next I have a flight that is GST inclusive.

So I add the 2 expenses separately via Expense (Invoices/bills). For the Council fee I type the invoice total and I uncheck the box 'includes tax' - because the invoice total does not include tax.  The flight is entered directly to the project without un-checking the GST checkbox.

Expense type	Invoice total	Expense total on project	Tax	Invoice value
Council fee	50.00	50.00	0	55.00
Flight	220.00	200.00	20.00	220.00
TOTAL	270.00	250.00	20.00	275.00

When the invoice is raised on the GST applicable sub project, my expenses will total $250.00 and the GST calculated during the invoice will be $25.00 (10%) for both transactions. 

based on a tax rate of 10%

GST Free

This tax rate setting will not calculate GST when the invoice is created.  Let's take the same example above, however apply the GST Free tax rate.

Example

Expense type	Invoice total	Expense total on project	Tax	Invoice value
Council fee	50.00	50.00	0	50.00
Flight	220.00	200.00	20.00	200.00
TOTAL	270.00	250.00	20.00	250.00

When the invoice is raised on the GST Free sub project, my expenses will total $250.00 and the GST calculated during the invoice will be $0.00 for both transactions - even though there is an expense with GST. 

based on a tax rate of 10%

Split tax rates on invoice

The general idea then is if you book a GST transaction or GST Free transaction to the sub project, it's the tax rate on the sub project that determines if we then on-charge GST on the invoice.

Should you need to enter both GST applicable and GST free expenses, they will need to be allocated to 2 separate sub projects.

Exercise

1. Add Disbursements as a sub project to the project. The fee type will be hourly cost/rate or capped rates and the tax rate will be GSTapplicable .

2. Create another sub project this time called Disbursement (GST Free). The fee type will be hourly cost/rate or capped rates and the tax rate will be GSTFree .

3. When entering expenses, you will select the relevant sub project in order to calculate the GST on the invoice correctly.

Want to learn more?

Looking for more help? Try reviewing the following Sub Projects topics: View Topics

Or try reviewing the following invoicing topics: View Topics

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