Use Tax

In Tax Code [Purchasing] form, clicking on Use Tax check box will prompt this message,

 

If you enabled Use Tax checkbox in an existing Tax Code, clicking Yes button from the message will clear Tax components in detail area.  

 

Refer to Adding Tax Code topic from the help file for more details on creating new Tax Code.

 

After clicking Yes button from the message, create the Tax Component for Use Tax. To create, click on Tax Components button to open Tax Components [Purchasing] form.

 

In Tax Components [Purchasing] form, click on Use Tax check box.  A Liability account dropdown combo box will be displayed.  You can then select any liability account from that dropdown and it will serve as the contra account for Expense Account.

 

 

Then save & close the form.

 

After adding Tax component, you can now select the created tax component from Tax Codes [Purchasing] details.

 

Notice that when Tax Code is set as Use Tax, there is an additional column – Liability Account.

 

Click save, then close button.

 

Use Tax, like any other Purchase Tax Code can be selected from Purchase Order, Purchase Receipt and Bill transactions Tax dropdown combo box.

 

This is how the Use Tax differs from other Purchase Taxes.  Notice that even after Use Tax has been selected, it does not add any amount in the Total Amount and Tax fields.  In this example, Tax field remains to show zero (0).  

 

Receive the items and process the transaction to Bill.

 

And when you check the Recap form for the said transaction, the Expense & Liability accounts that were setup in Tax Component (Tax Code [Purchasing] form) are used to record the Use tax Debit & Credit entry.  

 

Also, Use Tax can be selected for Miscellaneous Items from Purchase Order, Purchase Receipt, Bill and Bill Batch Entry form.

 

The Use Tax Summary and Use Tax Summary Total reports are used to consolidate transactions that use ‘Use Tax’.   These reports can be found in Report Manager under Account Payables report group.