You are an Australian company that is registered for both Australian and New Zealand GST. You use Xero. You are required to make a lodgement in both countries, and must track GST in your Xero file. Is it possible to do this?
Xero has not been designed to track GST in multiple countries, however following is a work around that you can implement in your Xero file to track and report on each liability.
Set up two new tax codes in Xero called NZGSTCOL and NZGSTPAID. To set up new tax codes in Xero, go to Settings | General Settings | Tax Rates.
NZGSTCOL – Tax Type will be Sales and the Tax Component will be GST at 15%
NZGSTPAID – Tax Type will be Purchases and the Tax Component will be GST at 15%
Set up a new account in your accounts list called NZGST. To set up your new account in Xero, go to Settings | Chart of Accounts. Choose add new account. The account type will be current liability. The Code will be NZGST. The Name will be NZ GST.
Configure your NZ Contacts, both customers and suppliers to be set to the updated GST tax codes. To do this, find your NZ contact, select edit, go to the financial details section of the contact, and update the default sales GST and default purchases GST to the applicable NZ tax codes.
Use these updated tax codes when you process your Sale and Purchase transactions, using the source currency of NZD.
Once a month, run the Activity Statement report. Go to the GST Audit Report (the last tab in this report). Scroll down and find your NZGSTCOL and NZGSTPAID codes. Take note of the GST collected and paid during the month. Please note the amount in this report is in Australian Dollars and you cannot obtain the source currency amount by using this report.
Raise a manual journal to move the NZ GST from the AUD GST liability account to the NZ GST liability account. To do this, go to Advisor | Manual Journals and choose New Journal. You will have to post this journal in AUD using the figures taken from Step 4 above. It is not currently possible to post a manual journal in Xero using foreign currency.
When completing the NZ GST Business Activity Statement, you will need to run additional reports to work out the total sales (in source currency) and the total purchases (in source currency). The best way to obtain these figures is to run the account transactions report (new) for all accounts that would have been used in your Sales and Purchases entries. Use Report Settings to run a filter on the report to show NZD currency only. Then, export to Excel and take a subtotal of each of these figures to report in the relevant boxes.
When you complete your NZ BAS, raise a purchase for the amount owing dated the last day of the remittance period. Select your NZ GST account. Run an account transaction report to ensure the credit (which was the original liability) and the debit (which is the bank payment) net to zero.