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ANSWER ID:32926

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When importing goods from overseas, GST is levied at 15% of the landed

-

cost of the goods and is payable to the

Customs

customs agent, not your overseas supplier. The GST paid to

Customs

customs needs to appear

in box

in Box 13 of the GST return

*

, so you need to create one

purchase order (bill) to

bill to record the overseas purchase and

another purchase order (bill)

another bill to record the costs associated with the import.

A Customs agent is usually employed to handle The customs agent usually handles the costs associated with the import. Generally, the Customs customs agent will arrange payment for, and and collection of, the goods on arrival in New Zealand, and may pay your customs duty, freight, insurance and GST liability. You will need to reimburse the Customs customs agent for these costs.

*This support note is for businesses reporting their GST on a Payments Basis. Our support note GST paid to Customs for imported goods - Invoice Basis is for those reporting on an Invoice Basis.

Setup

Go to the Accounts command centre and click Accounts List and ensure the following two Liability accounts exist. You can create an account by clicking New.

The way you record overseas purchases varies depending on your GST reporting basis (Payments or Invoice). Your accounting advisor will be able to provide additional information regarding anything that might be different for your business.

UI Expand

title	If you're using the Payments basis

Setting up

To track your overseas purchases and ensure the GST is reported correctly, you'll need to set up the following:

Create two liability accounts (Accounts > Accounts List > Liability tab > New).
- GST Input Tax Adjustments -

This account should be linked to the GST return where it will be reflected in box 13.

- this account might already exist in your company file
- GST Paid to Customs -

This

- this account will hold the value of GST paid to

Customs.
Here are our examples:

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- customs
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Create a

new

GST Code called

GST on

GST on Import (

go to the Lists menu and choose

Lists > GST Codes

, then click NewGo into

).

Here's our example:

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Link the GST Input Tax Adjustments account to box 13 on your GST return.

Go to the Accounts command centre and click Prepare GST

return

Return.
Select the GST Input Tax Adjustments account

in Box

for box 13.

See

Here's our example

below.

:

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Methods of recording overseas purchases

Method 1: Record the overseas purchases, treating the import costs as expense items.

Method 2: Record the overseas purchases, including all costs in the item value.

Method 1: Record the overseas purchases, treating the import costs as expense items

Create an Expense

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Click Preview GST Return to ensure this is saved.
Close the GST return.

Create an Expense account (or Cost of Sales) account for the Customs Agent's charges.

See our example below.

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Create a bill (Purchases > Enter Purchases) to record the purchase from your overseas Supplier as normal, excluding the GST. If the supplier charges you freight, this will need to be included on this purchase. Here's our example.

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Create a separate bill for the imports costs paid to the customs agent (not including any freight charged by the supplier).

Enter the Import Agent's/Customs' charges, using

Here's our example:
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Recording the overseas purchase

Depending on how you want to treat the imports costs, there's two ways you can record the overseas purchase and account for the GST.

UI Expand

title	Treat the import costs as expense items

Create a bill for the purchased goods. Exclude the GST by deselecting the GST Inclusive option, and coding the purchase using the E GST code. Here's our example:
Image Added
UI Text Box
type note
If the supplier has charged you freight costs, this should be included on this bill.
Create a separate bill for the import costs paid to the customs agent.
- For the customs charges, allocate it to the Customs Agent Charges expense account created earlier, and use the E GST code to exclude any GST.

On another line, enter the value of the total GST on the Import, using the Allocation Account

- For the GST on the import, allocate it to the GST Paid to Customs

. Code this line as GST Exempt

- liability account and use the GOI GST code.
- For the import duty charged by the customs agent

use the expense account created above

- , allocate it to the GST Paid to Customs liability account and use the S15 GST code.
- For any other expenses the

Customs

- customs agent may be charging you, for example overseas freight and/or insurance,

enter as below, selecting the

- allocate it to the applicable expense account and use the E GST code

E.

Make sure the GOI GST Code is applied to the GST on Import . See our example below.

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Note:

- .
- If any local freight has been charged, allocate this to the applicable freight account and use the S15 GST code. Here's our example:
  Image Added
  UI Text Box
  type note
  This transaction will increase expenses and record the GST to be included in the GST adjustment.
Pay these bills as usual.

Transferring the GST

Before running your GST return, you need to determine the GST

Return, run the GST

value from the import, then transfer this amount to the GST Input Tax Adjustments account.

Here's how:

Run the GST [Detail - Payments]

report, filtered for the

report (Reports > Index to Reports > GST > GST [Detail - Payments]). Filter the report for the GOI (GST on Import) GST

Code for

code for the relevant period. Here's our example: Image Added

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Record

a journal Record

a journal entry (

go to the Accounts command centre and click

Accounts > Record Journal Entry) to

transfer the balance from the

transfer the balance from the GST Paid to Customs

account to the

account to the GST Input Tax Adjustment account.

See our example below.

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Prepare your GST Return as usual - remember to enter the GST Input Tax Adjustments account for Box 13 (as shown above).
As shown in the following example, Box 13 should show the applicable Method 2: Record overseas purchases, including

Here's our example:
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Prepare your GST return as usual. Here's our example showing Box 13 with the applicable GST amount:

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UI Expand

title	Include all costs in the purchased item's value

Create an

Expense

inventory item to track the GST on imports.
- Name the item gstcustoms (or

Cost of Sales) account for the Customs Agent's charges if you don't already have one (see example above).
Create a new inventory item called GST on Imports. Indicate that the item is 'I buy' only and that the Expense account it is linked to is

- similar).
- Select the option I Buy This Item.
- For the Expense Account for Tracking Costs, select the GST Paid to Customs

account. This may prompt a warning that costs are usually allocated to an Expense account - disregard this warning. See our example below.

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- liability account created earlier (ignore the warning about the type of account you've selected).
- Click the Buying Details tab and select E as the GST Code when Bought.

Record the initial purchase of goods from the supplier as shown in

- Here's our example:
  Image Added
Create a bill for the purchased goods, excluding any GST. Here's our example:

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Record the bill from the Customs Agent. When entering the bill:

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UI Text Box
type note
If the supplier has charged you freight costs, this should be included on this bill.
Create a separate bill for the import costs paid to the customs agent.

Select the Item layout.
Enter a

line on the purchase for the item created above.
Enter the

line for the gstcustoms item created earlier, and enter its price as the

value of

GST paid to customs and use the N-T GST code.
Enter extra lines for each item

that

the import bill applies to, and add a portion of the

freight/insurance costs to

import costs to each line.

Note: You must enter zero quantities in the Received column. This is because you want to increase the stock's total

Enter zero for the Received quantity for these lines to ensure you increase their value only and not the quantity on hand. Use the N-T GST code for these lines.
If any local freight has been charged, allocate this to the applicable freight account and use the S15 GST code. Here's our example:

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Image Added

Pay

the invoice

these bills as usual.

Transferring the GST

Before running your GST return, you need to transfer the GST amount to the GST Input Tax Adjustments account. This will increase the average cost of the item(s) and ensure the GST is reported at Box 13 of your GST return.

Here's how:

Record a journal entry (Accounts > Record Journal Entry) to transfer the balance from the GST

amount from GST

Paid to Customs

to

account to the GST Input Tax

adjustments

Adjustment account. Here'

s our example:

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This journal entry ensures the GST is reported in the GST Return at Box 13.
Note: This transaction will increase the average cost of the item(s) and include GST on the Return as shown in the following example.

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s our example:
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Prepare your GST return as usual. Here's our example showing Box 13 with the applicable GST amount:
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UI Expand

title	If you're using the Invoice basis

Setting up

To track your overseas purchases and ensure the GST is reported correctly, you'll need a liability account to hold the GST paid by you to the customs agent. This account will need to be linked to Box 13 on your GST return.

Check your accounts list for a liability account called GST Input Tax Adjustments (go to Accounts > Accounts List > Liability tab). If the account doesn't exist, click New to create it.
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Link the GST Input Tax Adjustments account to Box 13 on your GST return.

Go to the Accounts command centre and click Prepare GST Return.
Select the GST Input Tax Adjustments account for box 13. Here's our example:
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Click Preview GST Return to ensure this is saved.
Close the GST return.

Create an Expense account (or Cost of Sales) account for the Customs Agent's charges. Here's our example:
Image Added

Recording the overseas purchase

Depending on how you want to treat the imports costs, there's two ways you can record the overseas purchase and account for the GST.

UI Expand

title	Treat the import costs as expense items

Create a bill to record the purchase from the overseas supplier. Exclude the GST by deselecting the GST Inclusive option, and coding the purchase using the E GST code. Here's our example:
Image Added
UI Text Box
type note
If the supplier has charged you freight costs, this should be included on this bill.
Create a separate bill for the import costs paid to the customs agent.
- For the customs charges, allocate it to the Customs Agent Charges expense account created earlier, and use the E GST code to exclude any GST.
- For the GST on the import, allocate it to the GST Input Tax Adjustments liability account and use the E GST code to exclude any GST.
- For the import duty charged by the customs agent, allocate it to the Customs Agent Charges expense account created earlier, and use the S15 GST code.
- For any other expenses the customs agent may be charging you, for example overseas freight and/or insurance, allocate it to the applicable expense account and use the E GST code.
- If any local freight has been charged, allocate this to the applicable freight account and use the S15 GST code. Here's our example:
  Image Added
Pay these bills as usual.

The above purchase will increase expenses and include the GST in Box 13 of your GST return.

Image Added

UI Expand

title	Include all costs in the purchased item's value

Create an inventory item to track the GST on imports.
- Name the item GST on Imports (or similar).
- Select the option I Buy This Item.
- For the Expense Account for Tracking Costs, select the GST Input Tax Adjustments liability account (ignore the warning about the type of account you've selected).
- Click the Buying Details tab and select E as the GST Code when Bought. Here's our example:
  Image Added
Create a bill for the purchased goods, excluding any GST. Here's our example:
Image Added
Create a separate bill for the costs paid to the customs agent.

Select the Item layout.
Enter a line for the GST on Imports item created above, and enter its price as the GST paid to customs.
Enter extra lines for each item the import bill applies to, and add a portion of the import costs to each line. Enter zero for the Received quantity for these lines to ensure only their value is increased and not the quantity on hand. Here's our example: Image Added

Pay these bills as usual.

The above purchase will increase expenses and include the GST in Box 13 of your GST return.

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Prepare your GST return

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Key

ANSWER ID:32926

Setting up

Recording the overseas purchase

Transferring the GST

Transferring the GST

Setting up

Recording the overseas purchase

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