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 Code A is set up in Tax Codes Configuration with these settings:
  • 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.