Attached is a list of tax codes and how they should be applied to transaction lines.
In general terms, when entering transactions the following tax codes apply:
- The code 'GST' is used for trading sales
- The code 'NCG' is used for non-capital trading purchases or expenses
- The code 'FRE' is used for the sale of goods that are specifically tax-free such as revenue from the sale of primary produce.
If a transaction does not have any tax, then the entry should not have a tax code at all.
The use of tax codes, can sometimes seem confusing for users. That is why that the tax code has been configured to report 'G6/G11' on the BAS return, that is revenue at G6 and expenses as G11. If you want to enforce the reporting of sales to be G6, then change the tax group to G6. The same may be done for the NCG tax code.
Each account in the Chart of Accounts may be configured with the correct default tax codes that will populate when adding a coding line, so that users will use the correct tax code.
Here is an ATO reference for entry of tax codes.