In Microsoft Dynamics Business Central, your GST liability can be calculated seamlessly on all transactions by performing a few simple setups in the system.
There are 2 Posting Groups relating to GST, they are the GST Business Posting Group and the GST Product Posting Group.
GST Business Posting Group
This indicates who you are buying from or selling to, e.g. if you are selling to an overseas customer, then that will have an impact on the GST rate you can charge them. Also whether they are registered for GST will impact whether they charge you GST for their services.
Examples of these posting groups which are assigned to you Customers and Vendors could be
– Domestic – Non registered
GST Product Posting Groups
This indicates what you are buying or selling, e.g. some financial services are exempt, but most products are taxable supplies which have 15% GST applied.
Examples of these posting groups which are assigned to your Items or Services could be:
GST 15 is used for entries that are subject to a GST rate of 15% – This is the standard GST rate for goods and services in New Zealand.
Zero GST is used for entries that are supplies which are not subject to GST in certain situations and have a rate of 0% applied to those supplies – These supplies can be duty free goods, exported goods, goods or services outside New Zealand, land transactions etc.
GST Exempt is used where the is no GST applicable on the goods or services, for example financial services such as bank fees.
Blank is used for entries that do not relate to the purchase or sale of goods and services. An example would be a transfer of funds from cheque to savings, this is not related to GST and therefore does not require a GST Business or Product Posting Group.
GST Posting Setup
This is where the relevant GST % is assigned to each combination of these two types of posting groups and will be used to determine the GST entries for each purchase or sale transaction. This is also where you tell the system which General Ledger accounts it should post the GST Input and GST Output to.
It is important to note that in Microsoft Dynamics BC, the GST posting groups must be set up correctly in order for the GST calculation to be performed correctly. This means that if an entry is subject to GST, it must be assigned the GST 15 posting group, and if it is exempt, it must be assigned the GST Exempt posting group, and if it is Zero GST it must be noted as such, all for reporting to tax authorities.
Understanding and properly utilising the GST posting groups in Microsoft Dynamics BC is crucial for accurate GST calculations and compliance with tax laws. It’s also worth mentioning that you should always check with the IRD for any updates on tax laws and regulations