June 18, 2017 | Patty Hair

Upcoming Changes to Tax Codes in Australia

The Australian Tax Office (ATO) is moving all businesses with less than $10M in GST turnover to the Simpler BAS reporting starting 01 Jul 2017. Simpler BAS enables businesses to be compliant with their GST reporting by using reduced number of GST codes–GST, GST Free, and Out of Scope–for all sales and purchase transactions.

This blog provides the following information:

  • How QuickBooks Online implements Simpler BAS
  • QuickBooks Online Simpler GST tax code quick reference
  • Considerations for app developers
  • Current limitations

You can find more information about Simpler BAS here.

How QuickBooks Online implements ATO Simpler BAS

Corresponding to Simpler BAS, QuickBooks Online provides a new set of tax codes known as the Simpler GST tax codes– GST, GST Free, GST on purchases, GST free purchases, and Out of Scope.

New QuickBooks Online companies

  • All new companies are put into Simpler GST tax codes by default starting July 1, 2017. That is, it has this set of five active GST tax codes – GST, GST Free, GST on purchases, GST free purchases, and Out of Scope.
  • There is an option to switch to Detailed GST tax codes via Edit settings on the GST page.

Existing QuickBooks Online companies

  • All existing companies can configure Simpler GST tax codes via Edit settings on the GST page.
  • If customers switch from Detailed to Simpler GST tax codes, QuickBooks maps any default GST codes the customer may have set on chart of accounts, recurring transactions, bank rules, and products and services to the Simpler GST tax codes, according to the table below.
  • There is no impact on existing transactions.

QuickBooks Online Simpler GST tax code quick reference

  • When are new Simpler GST tax codes available?
    The new codes are available July 1, 2017.
  • What is the full list of GST tax codes?
    This table captures the list of tax codes under both Detailed GST and Simpler GST. Tax codes highlighted in italics are present in QuickBooks API responses but marked as inactive.
Detailed GST tax codes
Tax code Applicable to
GST Sales
GST free Sales
GST free exports Sales
GST on capital Purchases
GST on non-capital Purchases
GST-free capital Purchases
GST-free non-capital Purchases
Input tax Sales and purchases
Out of Scope Sales and purchases
GST on purchases Inactive
GST free purchases inactive
Simpler GST tax codes
Tax code Applicable to
GST Sales
GST free Sales
GST on purchases Purchases
GST free purchases Purchases
Out of Scope Sales and purchases
GST free exports inactive
GST on capital inactive
GST on non-capital inactive
GST-free capital inactive
GST-free non-capital inactive
Input tax inactive
  • Can a company switch from one set of tax codes to another?
    Yes, they can switch back and forth at any time.

    • If the company switches from Detailed to simple GST codes, QuickBooks Online will automatically map any default GST codes that they may have set on chart of accounts, products and services and bank rules to the Simpler GST codes. They will however have to map default GST codes on recurring transactions.
    • If the company switches from Simpler to Detailed, they will lose default GST codes they may have set on chart of accounts, products and services, bank rules and recurring transactions.
  • Can a company have both set of tax codes enabled at the same time?
    No, it can have only one set of tax codes enabled at a time.
  • Can a company have no tax codes enabled, at all?
    Yes, If the company has not enabled GST, no tax codes are available to it.
  • What happens to existing transactions when the company is switched from one setting to the other?
    There will be no change to existing transactions when a company switches from Simpler to Detailed GST codes or vice versa. However, once it switches, it begins creating new transactions only with the new set of GST codes.
    Here is how codes are mapped between the two settings:
Detailed GST codes Simpler GST codes
GST GST
GST free GST free
GST free exports GST free
GST on capital GST on purchases
GST on non-capital GST on purchases
GST-free capital GST free purchases
GST-free non-capital GST free purchases
Input tax (for sales codes)

Input tax (for purchase codes)

GST free

GST free purchases

Out of scope Out of scope

Developer considerations

  • Apps should never hard-code tax Ids or codes in their source code as changes to the tax codes and values could lead to errors in the app.
  • To get the company’s currently active set of tax codes, set this SQL statement in your query request:
    select * from taxcode where active=true.
    See Data queries in QuickBooks for how to integrate the query operation.
  • Make sure your app is able to detect any change of tax codes: query for the set of active tax codes and refresh your internal list. If a new set of tax code is detected, apply the updated tax code before syncing or posting a new transaction to QuickBooks.
  • Before calling any API with a tax code, make sure the tax code is active in the QuickBooks Online company. If not active, the app may have to provide the user a way to get back to the UI to reset their default tax code
  • If a call is made to the API with an inactive tax code, issue an explicit error message to let the app redirect the user back to the setup again to set their default correctly.
  • The Webhooks and the Change Data Capture resources do not currently support the Tax Code resource.
  • You do not need to update past transactions.

Current limitations as of June 18, 2017

Simpler GST is currently available in sandbox companies with the following limitations:

  • When a new sandbox company is created, it is put in Detailed GST by default
  • Users can switch the company to Simpler GST through tax settings page
  • After they switch, the tax codes are updated but the option on the screen will still say Detailed GST
  • They can’t switch back to Detailed GST once they switch to Simple GST

Full end to end switch functionality will be available in QuickBooks Online v1706.

Patty

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