The company purchased some goods and services that were used for making mixed supplies, that is, taxable supplies as well as non-taxable supplies. In such case, the entity can recover only the input VAT only partially.
Note. At the end of the tax year, the business must also perform a "wash-up calculation" (annual apportionment adjustment) based on resulting proportion of taxable and non-taxable supplies made by the company during the tax year. For details on annual apportionment, refer to Case 13.
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- Click Create to create a new Input VAT Transaction.
- In the Company field, click a button to the right, then click Add (
) and create a virtual company (for instance, VAT Apportionment) for purposes of apportionment adjustments. - Select Invoice Received as a transaction type.
- Select Decrease as an adjustment type.
- Select the Generate GL Transactions check box.
- Select the Decrease Recoverable VAT check box.
- Make sure the correct entity is selected in the Entity field.
- Select the department associated with the transaction.
- Below the Basis field, notice the link in blue font that presents information about the currency, its exchange rate, price type, and taxation option. Make sure the taxation option is Prices Include VAT. Otherwise, click the link to open the Prices and Currency dialog box and select a check box for this option.
- Click Save to record the document.
- On the Inventory and Services tab, click Add to add a new line.
- In the Contents column, type a brief description of the transaction, for instance, "Period-end adjustment".
- In the Amount column, enter the calculated amount of mixed supplies for which the input VAT cannot be recovered.
- In the VAT, % column, select the 5% option. Check that the correct VAT adjustment amount (A) appears in the VAT Amount column.
- Save and post the document.
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