New Zealand GST Rate Change 1st October 2010

Changing the GST Rate from 12.5% to 15% in Stallion by Wilmat can be done simply, however there are a number of things to keep in mind. The following notes will help you change your GST rate to 15% and alert you to a couple of issues that may complicate the change.

Changing the GST Rate

Change the GST Rate. From the Stallion by Wilmat menu, select Files, Setup and Tax Rates.
Change the GST Rate. The Tax Rate screen is displayed. Simply change the rate against the GST tax rate from 12.5% to 15%. Also, change the GST Rate and the GST factor as shown. The GST factor is used throughout the system to calculate the amount of GST contained in a Tax Inclusive amount. For example $115 divided by the GST Factor of 7.6667, rounded, calculates $15.00 of GST contained in the Tax Inclusive amount. When the rate was 12.5% the GST factor was 9, a nice round number, now with a GST Factor of 7.6667, minor rounding variations may occur. The GST Basis is used in Australia when transferring receipts to MYOB. There are differences in the transfer journal between an Accrual and Cash basis when accounting for GST. This does not apply in New Zealand so there is no need to change this setting. Don't forget to click Save on the menu to save the changes that you have made.
Change the GST Description (Optional). Changing the GST description as shown might not be a bad idea. It might remind your clients that the increase in their charges is due to the increase in the GST Rate. Bear in mind that if you reprint an account from an earlier month the GST description will now show 15% when in fact the GST was calculated at 12.5%.
Run the End of Day process. The End of Day process divided the charges amongst the owners, calculates the GST and Owner Balances. Once the GST rate has been changed to 15% the End of Day will calculate GST at the new rate.
Check your Statements. Once you have changed your GST Rate and completed the End of Day process print some statements to the screen and check the figures. You should now see that the GST has calculated at 15%. If the GST is not calculating at the correct rate, go back to Files / Setup / Tax Rate and make sure that the GST Rate is correct.

Things to Consider

GST should be charged at 12.5% on all taxable charges on or before 30th September 2010 and at 15% on taxable charges after 30th September 2010. Therefore you would complete your September Accounts, close off September by running the End of Period processing and then change the GST rate as explained above.

Once you have rolled the system into October and changed the GST rate all taxable items will be charged 15% GST. Items of expenditure incurred prior to 1st October 2010 but not charged until October will also be charged GST at the higher rate. It may be a good idea to delay sending your accounts for a few extra days to ensure that all accounts for September charges have been received before closing off the month. If there are charges for which you have not received an account you may wish to get a verbal confirmation of the charge or estimate the amount of the charge so it can be included in September's Account.

Once a month has been closed, Stallion by Wilmat will not change values in previous months. In other words, changing the GST rate in October will not have any effect on previous months charges.

After 1st October, if you wish to make adjustments for amounts that have been charged in earlier months you will have to consider the GST implications. For instance, if you made a $200 charge in July, it would have attracted $25.00 GST. If you now wish to credit that charge, entering a credit of $200 will now attract a GST credit of $30. To avoid this problem you may need to give a $225 credit charge using a non taxable charge code. When reporting the GST charged to Inland Revenue you may need to manually adjust the figures provided by Stallion by Wilmat to allow for credits processed in this manner.

If you require any further assistance or have encountered any problems with the GST Rate change please do not hesitate to contact me by phone or email.