Enter partial exemption

Partial exemption can have a variety of applications based on a company's location and the regional policies it operates under. A nonprofit organization using a United Kingdom - VAT tax solution can enter an AP purchase invoice or AR sales invoice with items that are eligible for partial exemption to separate out the recoverable and non-recoverable portions of the input VAT. Australian companies can use it to take advantage of the reduced input tax credit (RITC) for purchases that have mixed business and personal use. Canadian companies can apply it to tax details to take advantage of different input tax credit (ITC) rates in different provinces.

For each item marked as partly exempt, Sage Intacct automatically handles the details of managing the partial exemption.

Entities that have partial exemption turned on cannot use the custom tax detail 'Assign taxes to expense account'. French entities cannot use partial exemption with cash basis tax capture.

Subscription
  • Taxes
  • Accounts Payable
  • Purchasing
Regional availability
  • Australia
  • Canada
  • France
  • United Kingdom
Permissions

Bills: List, View, Add, Edit, Post

AR sales invoices: List, View, Add, Edit, Post
Configuration

The tax solution for the entity is Australia - GST and the entity has been enabled for Reduced Income Tax Credit.

The tax solution for the entity is Canadian Sales Tax - SYS and the entity has been enabled for Income Tax Credit.

The tax solution for the entity is TVA Française - SYS and the entity has been enabled for partial exemption.

The tax solution for the entity is United Kingdom - VAT and the entity has been enabled for partial exemption.

For Canada, France, and the United Kingdom, you must also configure partial exemption for tax details.

See Set up partial exemption for more information on enabling and configuring partial exemption.

Accounts Payable

In a multi-entity company, enter the AP purchase invoice at the entity level.

To enter an AP purchase invoice with line items that are eligible for partial exemption:

  1. Go to Accounts Payable > All and select Add (circle) next to AP purchase invoices.

  2. Enter a line for the item that's eligible for partial exemption:

    1. Select the Account or Account label.
    2. Enter the Transaction amount.
    3. Select the Tax detail.

    4. For companies based in France or the United Kingdom, select the Partly exempt checkbox. For companies in Australia, select the RITC checkbox. For companies based in Canada, select the ITC checkbox.

      The recoverable and non-recoverable portions of the input VAT are automatically calculated. You can open the details area to see the amounts. The recoverable and non-recoverable portions are calculated based on the partial exemption rate in effect for the company or entity.

  3. Complete step 2 for as many items that you want to include that are eligible for partial exemption.
  4. Post the bill.
The recoverable amounts listed in the transaction details section calculate when you post. The amount you see before posting might not reflect the selected partial exemption detail.

Assume that your United Kingdom-based organization is configured for partial exemption with a partial exemption rate of 25%. You purchase office supplies at a standard rate, and you want to recover part of the input VAT.

So, you complete these steps:

  1. Create an AP purchase invoice and enter the header information.

  2. Enter a line item for the office supplies, selecting a goods standard rate Tax detail and the Partly exempt checkbox:

    For this line, Intacct does the following:

    • Calculates the transaction tax as 100.00 (.25 * 400.00).
    • Calculates and displays a recoverable tax amount of 25.00, using the partial tax exemption rate of 25% (.25 * 100.00). The recoverable tax amount is displayed in the details area for the line.

  3. When you post the AP purchase invoice, Intacct does the following:

    • Captures the 25.00 recoverable tax amount in the tax record for reporting on the tax return.
    • Debits the 25.00 recoverable tax amount to the GL account for the tax detail, and debits the 75.00 non-recoverable tax amount to the GL account for Office Supplies. The non-recoverable tax amount is part of the expense of the supplies.

Purchasing

In a multi-entity company, enter the AR sales invoice at the entity level.

To enter an AR sales invoice with line items that are eligible for partial exemption:

  1. Go to Purchasing > All and select Add (circle) next to AR sales invoices.

  2. Enter a line for the item that's eligible for partial exemption:

    1. Select the Item Id.
    2. Enter the Quantity and Unit price.

    3. For companies based in France or the United Kingdom, select the Partly exempt checkbox. For companies in Australia, select the RITC checkbox. For companies in Canada, select the ITC checkbox.

      The recoverable and non-recoverable portions of the input VAT are automatically calculated. You can open the details area to see the amounts. The recoverable and non-recoverable portions are calculated based on the partial exemption rate in effect for the company or entity.

  3. Complete step 2 for as many items that you want to include that are eligible for partial exemption.
  4. Post the AR sales invoice.
The recoverable amounts listed in the transaction details section calculate when you post. The amount you see before posting might not reflect the selected partial exemption detail.

Assume that your organization is configured for partial exemption with a partial exemption rate of 25%. You create a PO purchase invoice, and you want to recover part of the input VAT.

To do that, complete these steps:

  1. Create an AR sales invoice and enter the header information.
  2. Enter a line item for the office supplies, selecting the Partly exempt checkbox: 

  3. For this line, Intacct does the following:

    • Calculates the transaction tax as 100.00 (.25 * 400.00).
    • Calculates and displays a recoverable tax amount of 25.00, using the partial tax exemption rate of 25% (.25 * 100.00). The recoverable tax amount is displayed in the details area for the line.

  4. When you post the AP purchase invoice, Intacct does the following:

    • Captures the 25.00 recoverable tax amount in the tax record for reporting on the tax return.
    • Debits the 25.00 recoverable tax amount to the GL account for the tax detail, and debits the 75.00 non-recoverable tax amount to the GL account for Office Supplies. The non-recoverable tax amount is part of the expense of the supplies.