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The change in the rate of VAT from 1 April is not as simple to implement as what some would like as to believe, especially EasyBiz, who think it as simple as changing the rate in the VAT item list. However, because of the requirements in Section 9 of the Act, most of us will be using both rates for a while still.
There is also the not so simple matter of an SD14 return that SARS may require when your IT14 return is submitted. If your system cannot separate the transactions at the two percentages then you may well turn grey overnight.
So then, this is what we suggest to enable this to be dealt with seamlessly, whether you sell and purchase products, services or you manufacture and sell goods.
1. Control Account
a. Click Lists, then Chart Of Accounts and scroll down to Other Current Liability.
b. Locate and rename your VAT control account (usually VAT control) to VAT control (14%). Quickbooks will take a while to implement the change depending on how many entries there are.
c. Add a new other current liability account and call it VAT control (15%)
2. VAT Vendor (Supplier)
a. Your VAT vendor in Suppliers is most probably named SARS or something similar. Edit it so that it is now SARS (14%).
b. Now add a new Vendor. Name this supplier SARS (15%). Now go to the VAT Settings tab and tick the box “Supplier is a VAT Agency”.
c. On the VAT Settings tab, the VAT Return field select “VAT 201 (South Africa)”.
d. VAT Label field type VAT.
e. Tick the box “Track Sales to” and select VAT control (15%)
f. Do the same for “Track Purchases to”.
g. Select “Reporting Period “ and from the drop down and select Invoice basis or Payment basis at the bottom of the screen.
3. Items
a. Select Lists, Items.
b. On the Column Header, click on “Type” so that all items are sorted on Type.
c. Go down the list to VAT Items.
d. Double click on the first item, usually Capital Goods Purchases and note the name of the VAT Return Box.
e. Close the screen. Now right click and select Duplicate Item.
f. The edit screen will open with the suggested name “DUP Capital Goods Purchases”. I suggest replace the DUP with “15%”.
g. The VAT Vendor box should reflect SARS (14%). Change it to SARS (15%).
h. Select the appropriate VAT Return Box from the drop-down list.
i. Do the same for all VAT items.
j. Close the items list.
4. VAT Codes
a. From the top menu click on VAT and select VAT code list
b. The list of codes as they presently are will be displayed.
c. Edit each code. You are allowed 3 characters so we have changed them by preceding the character(s) with a 4, to denote 14%. If your code already denotes 14% then obviously you can leave it alone.
d. Double click each code so that you can read the “VAT Item for purchases” and the “VAT item for sales”.
e. Add a new code for each item, we suggest using the same code but precede it with a 5 instead of a 4 and select the Vat items that you created preceded with the 15% in section 3 above.
f. Do the same for each item.
5. Processing transactions.
a. Using your items codes will still produce the same 14% VAT result. However you must select the appropriate new VAT code if in fact it applies.
b. Once the 14% becomes the minority then change the VAT field in the Item setup. Now it will default to 15% but if you need 14% you just change the VAT code.
6. VAT Reports
a. When you select the VAT201 report or the VAT detail report, there is a dropdown box at the top where you must select the appropriate VAT Agency. You should select first the one, then the other.
b. If you export the report to Excel you can easily add them together.
7. Inventory items.
a. You can sell or purchase inventory items and initially select the appropriate code.
b. Once 14% is out of your system change the inventory codes to default to the 15% VAT Code.
c. If you have many items them you might want to do a mass import via Excel or IIF, which will only take a few minutes.
8. Warning.
a. Any setup changes should be preceded by you backing up or copying your data.
b. We suggest you do that before each main section, so that means 6 or 7 backups in all.
9. Inactivation.
a. Once you are confident that all 14% entries are a thing of the past, you can simply make all unused codes “Inactive”. Right Click and select “Make Inactive”.
b. You can still use the code or name by typing it; it simply won’t appear in a dropdown.
If any of this presents a new crisis, please post it here.
There is also the not so simple matter of an SD14 return that SARS may require when your IT14 return is submitted. If your system cannot separate the transactions at the two percentages then you may well turn grey overnight.
So then, this is what we suggest to enable this to be dealt with seamlessly, whether you sell and purchase products, services or you manufacture and sell goods.
1. Control Account
a. Click Lists, then Chart Of Accounts and scroll down to Other Current Liability.
b. Locate and rename your VAT control account (usually VAT control) to VAT control (14%). Quickbooks will take a while to implement the change depending on how many entries there are.
c. Add a new other current liability account and call it VAT control (15%)
2. VAT Vendor (Supplier)
a. Your VAT vendor in Suppliers is most probably named SARS or something similar. Edit it so that it is now SARS (14%).
b. Now add a new Vendor. Name this supplier SARS (15%). Now go to the VAT Settings tab and tick the box “Supplier is a VAT Agency”.
c. On the VAT Settings tab, the VAT Return field select “VAT 201 (South Africa)”.
d. VAT Label field type VAT.
e. Tick the box “Track Sales to” and select VAT control (15%)
f. Do the same for “Track Purchases to”.
g. Select “Reporting Period “ and from the drop down and select Invoice basis or Payment basis at the bottom of the screen.
3. Items
a. Select Lists, Items.
b. On the Column Header, click on “Type” so that all items are sorted on Type.
c. Go down the list to VAT Items.
d. Double click on the first item, usually Capital Goods Purchases and note the name of the VAT Return Box.
e. Close the screen. Now right click and select Duplicate Item.
f. The edit screen will open with the suggested name “DUP Capital Goods Purchases”. I suggest replace the DUP with “15%”.
g. The VAT Vendor box should reflect SARS (14%). Change it to SARS (15%).
h. Select the appropriate VAT Return Box from the drop-down list.
i. Do the same for all VAT items.
j. Close the items list.
4. VAT Codes
a. From the top menu click on VAT and select VAT code list
b. The list of codes as they presently are will be displayed.
c. Edit each code. You are allowed 3 characters so we have changed them by preceding the character(s) with a 4, to denote 14%. If your code already denotes 14% then obviously you can leave it alone.
d. Double click each code so that you can read the “VAT Item for purchases” and the “VAT item for sales”.
e. Add a new code for each item, we suggest using the same code but precede it with a 5 instead of a 4 and select the Vat items that you created preceded with the 15% in section 3 above.
f. Do the same for each item.
5. Processing transactions.
a. Using your items codes will still produce the same 14% VAT result. However you must select the appropriate new VAT code if in fact it applies.
b. Once the 14% becomes the minority then change the VAT field in the Item setup. Now it will default to 15% but if you need 14% you just change the VAT code.
6. VAT Reports
a. When you select the VAT201 report or the VAT detail report, there is a dropdown box at the top where you must select the appropriate VAT Agency. You should select first the one, then the other.
b. If you export the report to Excel you can easily add them together.
7. Inventory items.
a. You can sell or purchase inventory items and initially select the appropriate code.
b. Once 14% is out of your system change the inventory codes to default to the 15% VAT Code.
c. If you have many items them you might want to do a mass import via Excel or IIF, which will only take a few minutes.
8. Warning.
a. Any setup changes should be preceded by you backing up or copying your data.
b. We suggest you do that before each main section, so that means 6 or 7 backups in all.
9. Inactivation.
a. Once you are confident that all 14% entries are a thing of the past, you can simply make all unused codes “Inactive”. Right Click and select “Make Inactive”.
b. You can still use the code or name by typing it; it simply won’t appear in a dropdown.
If any of this presents a new crisis, please post it here.
Of course!
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