In some cases, recoverable taxes can only be accrued and accounted for after the invoice is paid. This is known as deferred recoverability. You can set up taxes with deferred recoverability by enabling the following options at the Tax Regime, Tax, Tax Status, or Tax Rate levels in E-Business Tax. Tax Regime is the most generic level. Tax Rate is the least specific. If you set the options at the Tax Rate level it will override any settings at a more generic level.
Example:
o Assume that you have following tax setup in E-Business Tax.
Tax Rate: 15%
Tax Expense Account: 01-SalesTaxA/C
Recovery Rate: 40%
Default Recovery Settlement: Deferred
Tax Recoverable/Liability Account: 01-TaxRecoverA/C
Interim Tax: 01-DeferredTaxA/C
o Create standard invoice from invoice workbench.
Invoice Amount: 1150$, Total Tax: 150$ (15%)
Lines:
Item-------1000$
Tax---------150$
Distributions:
Item-------1000$
RTax---------60$
NRTax--------90$
o Accounting
Invoice Accounting:
CCID-----GL Account----------Dists--------Cr/Dr---Amount($)
17347 01-ItemExpA/C (Item) Dr 1000
13850 01-LiabA/C (Liability) Cr 1000
Credits recoverable tax amount into Interim account until invoice is paid
12864 01-DeferredTaxA/C (RTax) Dr 60
17347 01-SalesTaxA/C (NRTax) Dr 90
13850 01-LiabA/C (Liability) Cr 150
Payment Accounting:
CCID-----GL Account----------Dists--------Cr/Dr---Amount($)
13850 01-LiabA/C (Liability) Dr 1000
89275 01-CashA/C (Cash) Cr 1000
13850 01-LiabA/C (Liability) Dr 150
89275 01-CashA/C (Cash) Cr 150
Moves recoverable tax amount from Interim account to actual Tax Recoverable account.
12864 01-DeferredTaxA/C (RTax) Cr 60
13394 01-TaxRecoverA/C (RTax) Dr 60
You can summarize these journals/accounting entries.
