Down Payments and Tax

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Created on April 27, 2015

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Table of content

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Table of content
1 Down Payments and Tax

1 Down Payments and Tax

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1 Down Payments and Tax

Depending on the legal specifications of your country, you may or may not have to post tax on down payments. If you generally do not have to post tax on down
payments, you can suppress the tax fields via the special G/L account (down payment account) as follows:
You can create the master records with an account group, via which the field Tax category is suppressed for the master record. You cannot then fill the field when
you create the master record.
You achieve the same by leaving the Tax category field in the master record blank. By doing this, all fields on tax are suppressed in the entry screens. For
more information on the layout of the screens, refer to the section "G/L account master data" in FI - General Ledger Accounting .
Net or Gross Display of Down Payments
If you post tax, you must define whether the down payment is to be displayed with or without tax in the open item and special G/L accounts.
With net display, the down payment is posted to the open item and down payment accounts without tax. The tax is posted to the input or output tax account.

With gross display, the down payment is posted to the open item and down payment accounts with tax. The tax is posted to the input or output tax account. To
clear the tax, the system also posts the amount automatically to a tax clearing account.

Gross display has the advantage that the down payment amount is displayed in the open item account with tax and consequently the entire amount of the
payable or receivable is displayed.
You decide whether the display is always net or gross via the down payment accounts. In these accounts, you enter a corresponding indicator in the field for the
handling of tax.
Indicators for Displaying Taxes

Display

Code

Down payments received - gross

+B

Down payments received - net

Down payments made - gross

-B

Down payments made - net

Display on the Balance Sheet

With net display, the down payment is displayed net on the balance sheet.
With gross display, you must transfer the down payment accounts to a balance sheet item using the corresponding tax clearing accounts. By doing this, the down
payments are displayed net.
The prerequisite is that you manage a separate tax clearing account for each down payment account (special G/L account indicator). Clearing accounts are
generally managed on an open item basis. You should not select this option for tax clearing accounts. Since the accounts are only posted to automatically, it is not
necessary to control open items.

You manage down payment accounts separately per consolidation and non-consolidation companies for general down payments and down
payments to intangible fixed assets. You post the down payments using the gross procedure but want to display them net on the balance sheet. To
do this, you require four clearing accounts for input tax clearing, separated by down payment type and by consolidation and non-consolidation
companies.

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The system posts the tax automatically. That is, it determines the tax and clearing accounts when you post the document. You must define the numbers of the
accounts in the system beforehand. You must differentiate the clearing accounts by down payment type (such as the special G/L indicators I and A) and by
consolidation and non-consolidation companies. To do this, you specify a two-digit key, which groups this information, when you enter the numbers of the special
G/L accounts. You enter this key when you enter the clearing accounts for tax.

With non-consolidation companies, you enter the indicator

A for general down payments and I for down payments on intangible fixed assets. With consolidation companies, you enter the keys AV and IV respectively. You
use these keys to differentiate the accounts for tax clearing.

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