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 t...

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.
- CloverQ
  Former Staff
  5 years ago
  Hi SherylBT
  
  The reports and BASlink calculation were designed to meet ATO's reporting requirements, I'm afraid that we do not have plan to change how data are gathered and reported in GST reports.
  
  For any incomes, we do suggest recording them accordingly. They can be recorded as sales invoices, receive money transactions, or even journal entries (sales). If you have a supplier who is also a customer, I'd suggest following this Help article to set it up as contra deals: Dealing with a supplier who is also a customer.
  
  It would also be a good idea to discuss with your accountant for the best ways to set up and record these transactions for your business situation.