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Community > Using Xero >

How to handle bills with partially exempt GST (e.g. Telstra)

Started by Geoffrey Everist -   in Using Xero

How should bills with partially exempt GST components be handled in Xero? For example, the GST amount in bills from Telstra is less than 10% (presumably because a component of their service is exempt); e.g. in a $99.99 bill the GST stated on the bill is $6.09, not $9.09 as calculated in Xero.

Unfortunately Telstra does not itemise the exempt/non-exempt components in their bills so they can't be easily entered as separate line items. The simply state the GST amount.

I can't see an obvious way of adjusting the input GST rate.
Geoffrey - you're going to have to crank out your calculator and Maths skills here. You will need to create two transaction lines - the first containing the portion that has been fully taxed, and the second containing the portion that is Exempt (use "No GST" tax code). To wok out the amount of each line you will need to divide the actual GST back to find the taxed portion. For example; if your total invoice is $120 with $10 GST, then there would be $100+GST plus $10 No GST.

Peter McCarroll  

Yep, that's what I ended up doing. Was hoping there was an easier way...

Geoffrey Everist  

I have just worked out a slightly easier way (ie less need for a calculator). It does require putting in line items for each sub-section of the detailed version of Telstra bill though.

I found that the detailed bill indicated the exact line items that were GST free, in my case 2 items, one buried inside a sub-section amount ie $9 dollars out of $133.55 while the other was a complete sub-section ie $20. I subtracted $9 from the $133.55 and put in a separate $9 GST free line item into the bill in Xero and changed the other sub-section to GST free.

Then I got stuck for a moment as the GST still didn't match what the Bill indicated by plus 7 cents, ie $29.68 rather than $29.61. After trying to find another line item in the bill I had a brainwave and simply added 2 more line items to the bill in Xero, one a negative GST amount of $0.70 which brought the GST on the bill down to the correct amount of $29.61 and a positive GST free amount of $0.70 which brought the bill total back to the correct figure.

Hope this might help others trawling the Help centre!!

Andrew Swenson  

Had another brain wave!

Why not just put in 2 additional line items the first a GST amount which reduces the GST component of the bill to match what is shown on the bill eg total bill amount is $355.26 with $29.61 of GST but Xero calculates the GST at $32.30. So I need to reduce the GST by $2.69 which is possible by adding a negative GST line item of $29.59 ($2.69 x 11) then adding a positive GST free line item of $29.59.

This means you don't need to determine the exact GST free component of the bill first.

The accountants out here may find some issues with this solution but it works mathematically and in Xero!

Andrew Swenson  

Maybe you can use this calculator to get the two separate components.


Hope this helps.

Terry Koutsopoulos  

Thank you for the calculator, that's perfect!

Nicci Meredith  

Hi Geoffrey
I just come across a similar thing however my bill on the third page says
Total $168.28
Total new charges in this bill $168.28
GST Free items included in new charges $67.00
GST included in new charges $9.21

so just minus GST free items from total and put that figure in your first line to get your correct figure
then on the next line is your GST free amount

Rachel Bury  

There are so many pages on this topic and it has been going ion for so long. Why don't Xero listen to their customers? Why don't they simply code the two line solution? I am contemplating hours and hours of wasted time entering their so called two line "solution". Drives me nuts.....

Rod Campbell-Ross