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Description
The proforma remittance functionality has been enhanced so that, for VAT /GST registered contractors, sales tax ( VAT /GST) is now calculated on taxable items when the the contractor’s pay items at the time when a proforma remittance document is generated. That is, at the point when the corresponding timesheet a timesheet belonging to the contractor is released for pay processing from the Interpreter for pay processing.
On the proforma remittance document, the VAT /GST amount that has been calculated when at the time of generating a proforma remittance is displayed on the document is generated is shown in the Item Tax Amount field at the pay item level and those amounts are also included in the Tax Total and the sum of the individual VAT amounts is shown in the Total VAT field at the document totals level, as highlighted in the example below.
Definition of a VAT/GST Registered Contractor
To be considered a VAT/GST registered contractor, a payee must meet the following criteria depending on the payroll country:
United Kingdom
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Tax Type must be Contractor or CIS
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VAT that is calculated when the proforma remittance is generated is not recalculated again when the corresponding timesheet is paid in a pay batch. Instead, the VAT amounts that have already been calculated are brought into the pay batch at the VAT pay batch stage (for more information, see Inclusion of VAT from Proforma Remittance in Pay Batch).
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A payee is considered to be a VAT registered contractor if the payee:
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VAT Registered must be ticked
Australia
Tax Type must be Company
Payee Type must be Company, 3rd Tier Agency or Umbrella
GST Registered must be ticked
New Zealand & Non-payroll Countries
Tax Type must be Contractor
Payee Type must be Contractor, 3rd Tier Agency or Umbrella
GST Registered must be ticked
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The VAT registration status of a payee is captured under a payee validity period on the Payee record. |
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The system refers to the payee validity period that applies on the date when the timesheet is released from the Interpreter for pay (i.e. when the interpreted timesheet status type is set to Reviewed -Pay Only or Reviewed - Pay and Bill) to determine if the payee is VAT registered |
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Tax Point Determination
For the purposes of calculating VAT /GST when generating the proforma remittance, the system uses the date the proforma remittance is generated to determine if the contractor is VAT /GST registered, by referencing the validity period on the Payee record that applies on that date, and to determine the tax rate that applies.
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By contrast, if a manual pay item is added to the contractors pay when the contractor is paid in a pay batch, the system references the payee validity period that corresponds to the timesheet period to determine if the payee is VAT/GST registered and therefore if VAT/GST is to be calculated.
In some infrequent scenarios, such as where the contractor may not be registered …
Benefits
This enhancement allows the proforma remittance functionality to be used to generate documents that meet the definition of a valid tax contractor self-bill tax invoice when issued to a VAT /GST registered contractor. In turn, that allows the pay company to claim the VAT /GST that is paid forward to the contractor at the time when the proforma remittance is generated without the need to wait until the contractor is paid.
For other enhancements in this release that facilitate using the proforma remittance functionality to generate contractor self-bill tax invoices, see …:
Configuration
No configuration required.
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To display the VAT /GST value amounts on the proforma remittance document, the existing Tax Amount field Item Tax Amount and Total VAT fields must be added to proforma remittance document format, if the formats do not already include those fields. For more information, see Configuring Document Formats. |