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  • Writer's pictureEH Lim

Manage Goods and Services Tax (GST) in the MoneyWorks accounting system with a non-Singapore dollar home currency

When dealing with the non-Singapore dollar home currency (e.g. US Dollars, USD) in an accounting system, it's important to note that the Goods and Services Tax (GST) submission to the Inland Revenue Authority of Singapore (IRAS) has to be in Singapore Dollar (SGD).

The home currency is the reporting currency for filing income tax to the authority (IRAS). Due to the business nature and regulations, some companies may set it up as a foreign currency (e.g. USD) instead of Singapore Dollar.

The transaction currency, on the other hand, is the currency used to transact between you and other parties (such as your customers and suppliers). It could be in USD, EUR, MYR, CNY, etc., depending on the agreement between you and other parties.

Assuming your home currency is USD. MoneyWorks translates the SGD GST amount (e.g. S$800) to USD (e.g. US$597.91 based on 1.3880 SGD to 1 USD) and posts the translated amount to the ledger when issuing an invoice to a local customer in SGD.

Check the GST transactions in the GST report (the detail section shows the SGD amount and summary captured in USD), then print the Tax by Currency report (a summary of SGD taxable and tax amount) to file GST.

MoneyWorks accounting system -- Tax by Currency Report

Although you are not using the IRAS connect feature in MoneyWorks, you still have to finalise the GST in MoneyWorks for the GST cycle end. Finalising is to close the GST cycle (e.g. GST for the Jan to Mar period) in the accounting system and open a new cycle (e.g. Apr to Jun). Then, after finalising, use a general journal to reclassify the GST output and input to the GST control account (a.k.a. GST holding) if you have forgotten to select the checkbox for "Journal to GST holding account" when finalising GST.

The GST control account is a transition account that holds the finalised GST payable amount or refunds temporarily until you pay or receive the claim from IRAS. The GST control is a current liability account in the home currency (USD). You will see USD 597.91 (equivalent to SGD 800) in the GST control account after you have finalised the GST.

Set up IRAS (the Comptroller of Goods and Services Tax) as an SGD supplier in MoneyWorks to facilitate payment of GST if you have not done so.

Make a payment of SGD 800 to IRAS with the GST control account. Assuming the exchange for the payment has changed to 1.3500 SGD for 1 USD, MoneyWorks will post USD 592.59 to the GST control account and, in this case, a credit balance of USD 5.32 (597.91 - 592.59) in the account, which you then use a general journal to reclassify it to the exchange gain/loss account.

MoneyWorks accounting system -- Ledger Report

Consider using a transaction user field to record the SGD GST amount if you are charging or receiving a USD bill with a GST. Since the sales or purchase invoice is in your non-Singapore dollars home currency (e.g. USD), the exchange rate is 1, which the system cannot determine a translation rate to SGD. Or it may be easier to translate and record the transaction in SGD instead of USD.

Contact us for a demo to learn more about the MoneyWorks accounting system.

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