Forum Discussion

5 years ago

GST on Commission appearing as a negative purchase

As a booking agent for tour operators, we enter the cost of the tour as a purchase less the commission. The purchase is an expense and the commission is income. We pay the operator the balance once the visitor has been on the tour.

This works well, however the commission appears on the GST reports and in BASLink as a negative purchase rather than income. This also reduces the G1 & G11 figures we are reporting to the ATO although doesn't affect the total GST owing.

Is there any way to correct this without going through the GST detail report and seperating the comission out? The detail report is 66 pages long and this is very time consuming.

I have thought of creating a new GST code for commission so that it will appear on the detail report seperately, however I will still need to manually adjust the G1 & G11 in BASLink.

StephanieLee
5 years ago
Hi SherylBT, I use the method Steven_M has suggested, having two cards for each supplier (one a customer and one a supplier) and using a "contra" bank account to offset the sale amount of the commissions from the suppliers purchase. I take your point though, it certainly is a lot of work if there are a large volume of transactions.

One work around might be to do just two journals at the end of the BAS reporting period to "correct" the entries in bulk. To make things easier though, you might need to have a separate Commission income account that you only use for commissions that have been deducted from purchases. Then after the quarter you can just look at that one account to see the total value of commission that has been deducted for the period - and do the correcting entries as per below:

E.g. If I have earnt (deducted from purchases) $2,000 plus GST from all my suppliers, then the following journal will reverse the negative purchase entry. Note: before recording make sure the "Display in GST [BAS] Reports as" has Purchases selected.
Commission Earned on purchases DR $2,000.00 (plus GST)
Contra Account CR $2,200.00 N-T

Then do another journal, making sure the "Display in GST [BAS] Reports as" has Sales selected to make the correction and correctly record the sale:
Contra Account DR $2,200.00 N-T
Commission Earned on purchases CR $2,000.00 (plus GST)

As you can see, the net effect on both these journals is nil - it just moves them from a purchase to a sale on your report.

Hope this is of some help.

Steven_M
Former Staff
5 years ago
Hi SherylBT

For GST purposes the type of transaction will denote which side of the GST reporting the amount will appear. Purchase & Spend Money transactions will go through to the Purchase value whereas Sales & Receive Money transactions will come through as Sale values.

When recording negative values it will create a negative for that GST value based on the transaction type i.e. a negative on a purchase will reduce the Purchase value whereas a negative on a sale will reduce the Sales values. If you don't wish for this occur i.e. a negative purchase value to appear as a Sales based value, you would be looking at recording that part of the transaction as a Sales based transaction (either via Enter Sales or Receive Money)
- SherylBT
  5 years ago
  Thank you Steven_M , I understand the principal, but it is restrictive.
  
  With the volume of Purchases we enter especially in peak season, it is just not an effecient or viable way to enter the commission we receive as income against a ticket purchase as a seperate sale. Especially as the card is either for a 'Supplier 'or a 'Customer' and MYOB won't allow payments to be applied across different types of 'cards'.
  
  Is there a chance that MYOB would look at a 'fix' so that it is less restrictive and the user can choose which data they require in the GST Reports? For instance a negative value entered in a purchace against an income account should be considered income?
  
  Thank you and I look forward to a reply :)
  SherylBT
  - StephanieLee
    Experienced Cover User
    5 years ago
    Hi SherylBT, I use the method Steven_M has suggested, having two cards for each supplier (one a customer and one a supplier) and using a "contra" bank account to offset the sale amount of the commissions from the suppliers purchase. I take your point though, it certainly is a lot of work if there are a large volume of transactions.
    
    One work around might be to do just two journals at the end of the BAS reporting period to "correct" the entries in bulk. To make things easier though, you might need to have a separate Commission income account that you only use for commissions that have been deducted from purchases. Then after the quarter you can just look at that one account to see the total value of commission that has been deducted for the period - and do the correcting entries as per below:
    
    E.g. If I have earnt (deducted from purchases) $2,000 plus GST from all my suppliers, then the following journal will reverse the negative purchase entry. Note: before recording make sure the "Display in GST [BAS] Reports as" has Purchases selected.
    Commission Earned on purchases DR $2,000.00 (plus GST)
    Contra Account CR $2,200.00 N-T
    
    Then do another journal, making sure the "Display in GST [BAS] Reports as" has Sales selected to make the correction and correctly record the sale:
    Contra Account DR $2,200.00 N-T
    Commission Earned on purchases CR $2,000.00 (plus GST)
    
    As you can see, the net effect on both these journals is nil - it just moves them from a purchase to a sale on your report.
    
    Hope this is of some help.