Setting Up Wine Equalisation Tax Overview
A check list of things to do, and the procedure for setting Up Wine Equalisation Tax (WET).
Setting Up Wine Equalisation Tax Guidelines
The WET tax involves a complex application process with numerous variables, so SapphireOne requires users to calculate and enter the tax on a transaction-by-transaction basis.
Users are responsible for ensuring the accurate WET tax value is entered for each applicable transaction.
The reason for manual WET tax calculation is that it applies to the actual wholesale price of the wine, which may differ from the amount shown on the invoice. Distributors may add extra costs to the wholesale price on the invoice, and it is not possible to reliably identify this component for automatic WET tax calculation in SapphireOne.
When users enter the WET tax, the transaction’s final amount will be calculated as follows:
Value of the item(s) in the transaction + WET tax (as calculated by the user) + GST.
Upon creating a BAS, SapphireOne consolidates all transactions with WET tax entries into 1C on the BAS statement. Users can still manually adjust this value in the BAS statement if necessary. However, this should not be required if all transactions have the correct WET tax applied, as SapphireOne will enter the accurate consolidated value in 1C on the BAS statement.
Setting Up Wine Equalisation Tax procedure
- Master Defaults – To display the WET tax data entry field on Quotes, Orders, or Invoices, you must enable the WET checkbox by navigating to Utilities > Controls > Master Defaults > Invoices Page.
- General Ledger Account – You must set up a new General Ledger Account to hold the value collected for this tax. We recommend consulting your accountant for guidance on collecting this tax and setting up the appropriate General Ledger account.
- Control Account – In a Company Inquiry, you need to specify a Control Account so that SapphireOne knows which account to process when WET tax is entered on a transaction. To set this up, go to Utilities > Controls > Company Inquiry > Control Accounts > Default Tab.
The following three examples demonstrate the same transaction with varying WET tax applications:
- The first example illustrates a basic transaction with GST added.
- The second example includes WET tax applied to the full invoiced amount before GST.
- The third example also adds WET tax to the actual wholesale cost but at a reduced rate.
In these examples, we used the same transaction but simplified the amounts:
Line items with a value of $10,000.00, GST added at $1,000.00, resulting in an invoice total of $11,000.00.
Next, we add in WET of 29% on the whole $10,000 worth of line items.
- Line Items $10.000.00, WET $2,990.00 GST is now $1,290.00 and Invoice total $14,190.00
Now we alter it so that the distributor charges 30% for distribution and other on costs.
- The WET is no longer applicable to the entire $10,000 but on $7,000 which is the wholesale price.
- Line Items are still $10.000.00 but the wholesale price of them is considered to be $7,000.00
- 29% of $7,000.00 WET is now $2030.00, GST is now $1203.00, invoice total is now $13,233.00
- In the first case above $2,900.00 would be consolidated to 1C on the BAS when it is created.
- In the second case above $2030.00 would be consolidated to 1C on the BAS when it is created.