Automating VAT calculations during entries

When you create a journal entry for a transaction, Sage Active automatically calculates the associated tax amount if a relevant tax code is specified in the account settings within the chart of accounts.

The automated tax calculation, as explained earlier, is carried out in the journals for sales invoices, purchase invoices, credit notes received and credit notes issued.

The steps to assign a tax code to a ledger account are as follows:

1. Access the Chart of accounts.

   Settings > Accounting – Chart of accounts

2. Edit an account ( ).
3. Toggle the switch Apply VAT in journal entries to ON in the Identification tab.
4. Select a Tax code if there is not one provided.
   If you do not select a Tax code, you will be asked to select the Tax and Tax treatment for the ledger account when creating a journal entry.
5. Save your changes (Update).

When you perform an entry with an account that has a tax rate attached:

• The line for the tax will appear automatically;
• The amount for the tax will be recorded in the account that is associated to the tax code;
• The taxable amount of the entry is taken into account on the VAT return.