Non-Recoverable Tax Examples
You may find it helpful to review examples that illustrate how non-recoverable taxes are calculated in Vision.
Example
Both scenario A and B below use the following configuration settings and data entry:
- Tax rate is 13%
- Non-recoverable tax percentage is 8%
You enter $1,000 as the net amount for an Accounts Payable voucher in the Transaction Center.
Scenario A:
Accounts are entered in the Non Recoverable Debit Tax Account and Non Recoverable Credit Tax fields. Project (work breakdown structure) information is entered in the project fields in the Non-Recoverable Tax section on the Tax Codes tab in Tax Codes Configuration.
Results
The non-recoverable amount is not included in the net tax amount. The gross amount of the voucher is $1,130, the tax amount is $130, and the net amount is $1,000.
The general ledger entries are as follows when you post the transaction:
| General Ledger Account | Debit | Credit |
|---|---|---|
| A/P Liability | $1,130 | |
| Project Expense | $1,000 | |
| Debit Account entered for Tax Code A | $130 | |
| Non-Recoverable Debit Tax Account | $80 | |
| Non-Recoverable Credit Tax Account | $80 | |
| $1,210 | $1,210 |
The recoverable tax amount = $50 (130-80).
The non-recoverable amount = $80 (1,000*.08).
Scenario B:
The Non Recoverable Debit Tax Account, Non Recoverable Credit Tax Account, and project (work breakdown structure) fields are blank in the Non-Recoverable Tax section on the Tax Codes tab in Tax Codes Configuration.
Results
The non-recoverable tax amount is included in the net tax amount because this is what is posted to the project. The gross amount of the voucher is $1,130, the tax amount is $130, and the net amount is $1,000.
The general ledger entries are as follows when you post the transaction:
| General Ledger Account | Debit | Credit |
|---|---|---|
| A/P Liability | $1,130 | |
| Project Expense | $1,000 | |
| Debit Account entered for Tax Code A | $130 | |
| Project Expense | $80 | |
| Debit Account entered for Tax Code A | $80 | |
| $1,210 | $1,210 |
The net tax receivable is $50 (130-80). Two transactions hit the billable project.