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What is the difference between 'Out of scope (Purchases)' and 'GST-Free non capital (Purchases)? And which should i use when entering purchases that are GST free?

 
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Best answer 03-12-2019

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Intuit

Hey Dan  This guide made by accounting firm Richards Fina...

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!

6 Comments
Intuit

Hey Dan  This guide made by accounting firm Richards Fina...

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!

Active Member

Re: Hey Dan This guide made by accounting firm Richards Fina...

Hey Chris

 

The link you have posted above seems to be an old form from 2015? I cant find alot of the tax codes mentioned on the form on my end. 

 

Anyhow, would you be so kind as to clarify some information for me. I was instructed by the Quickbooks team to use "out of scope 0% purchases" on expenses that i have not been charged GST or i am not claiming GST on. For example i have a few suppliers that do not charge me GST. 

Is this the right code to use in this case? (Not being charged GST/or not claiming GST on an expense) 

 

Thanks

Kathy 

QuickBooks Team

Re: Hey Dan This guide made by accounting firm Richards Fina...

Hello, Keti14.


The sorting you’ve done in your item list won’t reflect the item line-up when selecting items in invoice/Sales order. Selecting an item when creating a sales transaction would always follow the system’s default line-up. Which is the following:


1.    Service
2.    Inventory Part
3.    Inventory Assembly 
4.    Non-inventory Part
5.    Other charge 
6.    Subtotal
7.    Group
8.    Discount  
9.    Payment 
10.    Sales Tax item
11.    Sales tax group


This is the reason why Flour is showing first. Currently, altering this line-up is unavailable. As a workaround, you can directly type in the item name when creating a sales transaction instead of selecting it from the list.


I’ll make sure to take note of your sorting preference and share it to our engineers for future updates. 


Visit us again if you have other questions. 
 

QuickBooks Team

Re: Hey Dan This guide made by accounting firm Richards Fina...


Hello, Keti14.


Yes, Out of cope (0%) is the right code when GST is not payable and you’re not claiming GST credits for purchases relating to these transactions. These are also not included in BAS return. 


You’re always welcome to visit us again if you need anything else while working with QuickBooks. 
 

Active Member

Re: Hey Dan This guide made by accounting firm Richards Fina...

Hey Chris, I see you mentioned to use Out of Scope as the Tax Code for all wages and superannuation payments. Why is that?
Shouldn't we just use BAS w1 & BAS w2?

Moderator

Re: Hey Dan This guide made by accounting firm Richards Fina...

Hi, roxanna.

I'd like to share some information regarding tax codes and BAS via QuickBooks Online.

 

W1 and W2 codes are automatically applied by KeyPay and imported to QuickBooks the moment we run and finalise payroll. No need for us to manually select tax codes for this.

 

For more details, check out these recommended articles:

 

Also, you may find these articles helpful:

 

For account discussion, feel free to reach out to our QuickBooks Online Support.

 

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  3. Select Contact US on the pop-up.
  4. Enter a brief description of your concern then hit Continue.
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Ping me out if you need more information concerning tax codes and BAS in QuickBooks. Have a good one.