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Hey Dan
This guide made by accounting firm Richards Financial Services explains the differences between each tax code - http://www.richards.net.au/site/wp-content/uploads/2_GST-Codes-in-QuickBooks.pdf
"Sometimes people get confused between when to use GST-free (0%) and when to use the Out of
Scope code. The distinction between the two codes is that transactions which are coded GST-free
(0%) are reported on your Business Activity Statement, whereas transactions coded Out of Scope are
not.
Use Out of Scope as the Tax Code for any transactions you allocate to an asset, liability or equity
account — such as tax payments, loan settlements, private drawings or transfers between bank
accounts. (The only exception is when you purchase new capital items, in which case you need to use
the GST on Capital code, as explained in the table above.)
Also, use Out of Scope as the Tax Code for all wages and superannuation payments. (Although you
do report wages on your Business Activity Statement, they appear separately from other expenses.)"
Hope this helps!