We are from Australia.

We have set up two tax classes on supplier.

When we made a purchase:

1) Within Australia, GST Purchase

2) Outside of Australia, GST Free Purchase (as the GST will be dealt with the freight company who deliver the goods to us)

Scenario:

When we made a purchase from outside of Australia, the PO,receipt of goods and Invoice are posted with no GST as it is an USD supplier.

We then engage a freight company, who is an Australian company (AUD). We get charge for the freight and enter as additional cost during the receipt of goods.

This freight company also pay the import GST (based on the purchased goods value) on behalf of our company, plus other custom fees.

The Custom GST payable (relates to the goods) is coming from the invoice of our freight company, not from the goods supplier.

The freight company sent us two invoices:

1) Freight invoice, with GST related to the service

2) Tax disbursement invoice, with custom duty as well as the import GST on the goods (eg invoice amount $2000)

When we enter the second invoice in the additional cost, $100 is the custom duty which should be formed part of the cost of the goods purchased. The balance $1900 is the import GST of the goods purchased. We enter $100 into the additional cost entry and adjust the tax amount to $1900.

The entry has been posted correctly into the I/C and GL.

However, in our tax tracking reports, it shows:

Invoice amount: $2000 (which is correct)

Tax base : $100 (which is not correct)

Tax amount : $1900 (which is correct)

My understanding is, the tax base is the ex.GST amount where the tax amount is based on. (in my case, the tax is shown as 1900%!)

This problem is due to this import GST appears on the freight invoice not the supplier invoice.

Has anyone encounter similar situation like this? Any suggestion on the best practice when it comes purchase from overseas?

Thanks in advance,

Keen