About GST Adjustments Due to Discounts/Allowances

If you do business in a country that requires the Goods and Services Tax (GST), the calculated tax on an invoice or voucher can be adjusted for any discounts. This applies only to invoices and vouchers in an item-based tax system.

Select the Tax Discount/Allowance field on the Tax Systems form to specify this. The adjusted tax amounts can be viewed on the A/R Payment Distributions and A/P Payment Distributions forms.

If you have a mix of taxable and exempt line items on one invoice, the discount is taken on the entire invoice. Tax is calculated on the taxable part of the discounted amount.

Adjustment Example

Without tax adjustments, when an invoice or voucher is created, the tax is calculated on the full amount. If a discount is part of the payment on an invoice or voucher, the tax amount is not adjusted. For example:

Sale           100.00
Tax              5.00
---------------------
Total Invoice  105.00
Payment        101.00
Discount         4.00

If the Tax Discount/Allowance field is selected, this example would change as follows:

Sale           100.00
Tax              5.00
---------------------
Total Invoice  105.00
Payment        100.80
Discount         4.00
Tax Adjustment    .20