The sync to Xero and impact of tax types on Xero’s BAS activity reporting

By Diana Younan | Mar 21, 2013

The online add on integration between coreplus and Xero provides you with a powerful and cost effective solution for generating financial, BAS and Payroll reports.

All your health practice’s “billing” activity is recorded within coreplus and therefore any invoices and payments generated by your health practice are recorded in coreplus.

To synchronise the billing activity, you simply need to enter the applicable Xero account codes in coreplus and authorise access of coreplus to Xero.

Once authorised, coreplus automatically syncs invoices and payments into the selected Xero accounts.

Data is then available in Xero to generate reports such as Profit & Loss and BAS Activity Statements.

Under the GST system of Australia, if you are registered for GST you must include GST on the price of goods or services, however there are some exceptions such as Medical and other health services.  Where goods or services are not taxable under the GST system, they are referred to as “GST Free” or input-taxed.

The following ATO links provide additional information:

In the health-services field, many transactions are classified as GST Free income.

Although such services are GST Free, they are still reportable on the BAS as they are business activity and related to the income generation of the business.

Therefore, you are required to set up whether the goods/ services you’re providing within your health practice are taxable or not.  (NB: We recommend you discuss with your accountant or business advisor how to do this for your health practice.)

For services that are taxable, you will typically include the “GST” amount in the invoice.

For services that are not taxable, yet business orientated income, you will need to specify an alternative tax code.

The question then arises…”What tax code do I use?”

We don’t offer advice and recommend that you discuss with your Accountant what tax code to use.  However, understanding tax code definitions within Xero will help you make the most appropriate decision as to which Tax code to use.

Typically, applicable business activity that is not taxable is currently subject to the tax code “GST Free Income” which means it will report on the BAS with $0 of GST applied.

Some cases will require “No GST” to be selected as the tax code.  In this case, any transactions with the No GST tax code will NOT be reported by Xero’s BAS.

Again, we recommend that you consult your financial advisor to confirm the correct tax type for your practice.

Don’t worry if you’ve already used an inappropriate tax code.  If required, your accountant can make a manual adjustment (journal) in Xero to adjust the BAS statement according to the appropriate tax type for your practice.

Note: Xero is planning a change to its tax code definitions in late March 2013; it’s expected the “No GST” option will be removed, and a new option called “BAS Excluded” will be added. The Xero settings page in coreplus will be modified to reflect this change.

As always, if you have any further questions please feel free to contact our Customer Service Team.

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