How to handle GST for local creditor using a foreign currency

Goods are ordered using a foreign currency and need to include GST as the supplier is in Australia. Any foreign currency purchase orders does not allow GST to be included.

Step-by-step guide

There are two results we need to have happen here - firstly to get the correct values for your BAS reports and secondly, raise the liability for the GST due. There are two options to enter the relevant data in for your BAS report and creditors - the Value Of Taxable Import tab in Landed Cost or Creditor Purchases and Creditor Credit Adjustments.

Using this example of $10,000.00 Ex GST Total + $1,000 GST here is how the two approaches work.

Option 1 - Value of Taxable Import

When using the Shipment form to enter the GST invoice, the check box Use Value of Taxable Import must be ticked before the Shipment is set to 'Commit for Booking In'.

Value of Taxable Import tab
select the creditor and type in Description
type in the Tax Amount (GST due on the purchase order) and the Amount field is automatically calculated (Note: The Amount field is not editable - only the Tax Amount can be entered)
select ledger account, type in the Invoice Number
tick Invoiced and save

This is the journal entry that gets created. The net result is GST Acquisition $1,000 and Creditors $1,000