General examples of tax calculations and ledger entries

Accrual module

This table shows tax calculation for Rates, with debt raised for $100 and tax deemed to be applicable at 10%:

Account	Value
Credit revenue account	90.90
Credit tax accrual account	9.10 (calculated 1/11 of 100.00 and rounded)
Debit control	100.00

This table shows tax calculation for Rates, with payment received for $100 and allocated to taxable debt:

Account	Value
Credit control account	100.00
Credit tax cash account	9.10 (calculated 1/11 of 100.00 and rounded)
Debit tax accrual reversal account	9.10
Debit bank account	100.00

Cash module

This table shows the tax calculation for Miscellaneous Receipts where the miscellaneous receipt type set up as taxable, with receipt generated for $100.00:

Account	Value
Credit revenue account	90.90
Debit bank account	9.10 (calculated 1/11 of 100.00 and rounded)

Modules where tax can be exclusive

These tables show the tax calculation for Applications, Licensing, and Debtors where fee code calculations or rate type specified as tax exclusive, with parameter or system calculated Fee = $100:

Account	Value
Credit revenue account	100.00
Credit tax cash account	10.00 (calculated 10% of 100.00 and rounded)
Debit bank (cash mode)	110.00

Overpayment or pre-payments

This table shows the tax calculation for Rates, Applications, Licensing, and Infringements, with payment of $100 received:

Account	Value
Credit overpayment or pre-payment	100.00
Credit tax cash account	9.10 (calculated 1/11 of 100.00 and rounded)
Debit tax clearing account	9.10 (calculated 1/11 of 100.00 and rounded)
Debit bank account	100

The credit tax cash and debit tax clearing accounts are effectively the tax accrual reversal and tax cash accounts as set up on the tax codes. The tax codes that are linked to overpayment or pre-payment parameters must be considered differently.

The tax cash account is the valid tax cash account for the module, assuming that the tax is applicable on overpayments and pre-payments. If you can wait until this payment is allocated before determining tax liability, then this account should be a Clearing account.

The tax clearing account is always a clearing account.

Allocation of overpayment or pre-payments

This table shows payment of $100 now allocated to a taxable debt:

Account	Value
Debit overpayment or pre-payment	100.00
Debit tax cash account	9.10
Credit tax clearing account	9.10
Credit bank account	100.00
Debit overpayment or pre-payment	100.00
Debit tax cash account	9.10
Credit tax clearing account	9.10
Credit bank account	100.00
Credit control account (accrual module)	100.00
Credit tax cash account	9.10 (from tax code applicable to debt)
Debit tax accrual reversal account	9.10 (from tax code applicable to debt)
Debit bank account	100.00
Credit revenue account (cash mode)	90.90
Credit tax cash account	9.10 (from tax code applicable to charge)
Debit bank account	100.00

This table shows payment of $100 now allocated to a non-taxable debt:

Debit overpayment or pre-payment	100.00
Debit tax cash account	9.10
Credit tax clearing account	9.10
Credit bank account	100.00
Credit control or revenue account	100.00
Debit bank account	100.00

Receipt reversals

You can use receipt reversals to reverse both the standard receipt ledger entries and any tax entries generated as a result of the receipt processing.

This table shows receipt for $100 allocated to a taxable fee in a cash module:

Account	Value
Debit revenue account	90.90
Debit tax cash account	9.10
Credit bank account	100.00

This table shows receipt for $100 allocated to a taxable fee in an accrual module:

Account	Value
Debit control account	100.00
Debit tax cash account	9.10
Credit tax accrual reversal	9.10
Credit bank account	100.00