# GST Inclusive/Exclusive Transactions

NexWave supports both GST-inclusive and GST-exclusive pricing across invoices, orders, quotations, and journal entries. This feature provides a simple toggle to control how amounts are entered, matching the behaviour of systems like Xero.

## Overview

In New Zealand, prices displayed to consumers must include GST (15%) under the Fair Trading Act. Most NZ businesses receive and issue invoices with GST-inclusive amounts. However, some transactions (exports, B2B wholesale) use GST-exclusive pricing.

NexWave lets you choose how you enter amounts on each transaction:

* **Tax Inclusive**: Amounts you enter already include GST. The system calculates the net amount and GST component automatically.
* **Tax Exclusive**: Amounts you enter are before GST. The system adds GST on top.

## Setting a Company Default

You can set a default for each company so new transactions automatically use your preferred mode.


1. Go to **Company** and open your company record
2. Scroll to the **Tax Defaults** section
3. Set **Default Amounts Are** to either `Tax Inclusive` or `Tax Exclusive`
4. Save

 ![](https://docs.nexwaveapp.com/api/files.get?sig=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJrZXkiOiJ1cGxvYWRzL2YxMTg5ZTEzLTdlMTQtNDA1ZC04MDI1LWMxZmI0Y2Y2MTg0ZC83OTE0NmU3ZS1kM2E3LTQ1YjEtYjMxMi0xMTUyNjU2MTYxZGQvU2NyZWVuc2hvdCAyMDI2LTA0LTAxIGF0IDAyLjM5LjI1LnBuZyIsInR5cGUiOiJhdHRhY2htZW50IiwiaWF0IjoxNzkyNjIxODAwLCJleHAiOjE3OTI3MDgyMDB9.l1-Pzz3e6SseBZBEiNtQQ8xiPVKqWBrpZY7cW_Q1oOo " =2272x1193")

New invoices, orders, and quotations for this company will use the selected default. You can override it on any individual transaction.

## Using the Toggle on Invoices and Orders

The **Amounts Are** field appears on the following documents, positioned just above the items table:

* Sales Invoice
* Purchase Invoice
* Sales Order
* Purchase Order
* Quotation

 ![](https://docs.nexwaveapp.com/api/files.get?sig=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJrZXkiOiJ1cGxvYWRzL2YxMTg5ZTEzLTdlMTQtNDA1ZC04MDI1LWMxZmI0Y2Y2MTg0ZC8wMzhlMjFjZi0yOGZmLTQ1OGEtODQ2MC0zNDQ2MGY1NDk2OTcvU2NyZWVuc2hvdCAyMDI2LTA0LTAxIGF0IDAyLjQwLjU4LnBuZyIsInR5cGUiOiJhdHRhY2htZW50IiwiaWF0IjoxNzkyNjIxODAwLCJleHAiOjE3OTI3MDgyMDB9.dvrHdwzx1xjTiOMzGFpHwfycMyL3lP1mEIZYQ_G59YU " =2272x1193")

### How It Works

When you change the toggle:

| Toggle Setting | What Happens |
|----------------|--------------|
| **Tax Inclusive** | Item rates are treated as GST-inclusive. The system back-calculates the net amount. Grand total equals the sum of your entered amounts. |
| **Tax Exclusive** | Item rates are treated as GST-exclusive. GST is added on top. Grand total equals your entered amounts plus GST. |

### Example

For an item entered at $115.00 with GST 15%:

|     | Tax Inclusive | Tax Exclusive |
|-----|---------------|---------------|
| Item Rate | $115.00       | $115.00       |
| Net Total | $100.00       | $115.00       |
| GST (15%) | $15.00        | $17.25        |
| Grand Total | **$115.00**   | **$132.25**   |

### Document Flow

The toggle carries over when creating downstream documents:

* **Sales Order to Sales Invoice**: The SI inherits the SO's toggle setting
* **Purchase Order to Purchase Invoice**: The PI inherits the PO's toggle
* **Quotation to Sales Order**: The SO inherits the Quotation's toggle
* **Sales Returns (Credit Notes)**: Inherit from the original Sales Invoice
* **Purchase Returns (Debit Notes)**: Inherit from the original Purchase Invoice

This ensures consistent tax treatment throughout the document chain.

## GST on Journal Entries

NexWave also supports automatic GST calculation on Journal Entry lines. This is useful for recording expenses, accruals, or adjustments that have GST implications, without manually calculating the tax split.

### Setting Up


1. Create a new Journal Entry
2. Set the **Amounts Are** field (in the GST Calculation section) to either `Tax Inclusive` or `Tax Exclusive`

### Entering Lines with GST

On each Journal Entry Account row, you can set a **GST Rate (%)** to enable automatic GST calculation.

 ![](https://docs.nexwaveapp.com/api/files.get?sig=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJrZXkiOiJ1cGxvYWRzL2YxMTg5ZTEzLTdlMTQtNDA1ZC04MDI1LWMxZmI0Y2Y2MTg0ZC8yZGY5NDI2YS1mNGFmLTQ2NWUtOGZhYS1mNjU2N2I2YTRhMDIvU2NyZWVuc2hvdCAyMDI2LTA0LTAxIGF0IDAyLjQxLjU3LnBuZyIsInR5cGUiOiJhdHRhY2htZW50IiwiaWF0IjoxNzkyNjIxODAwLCJleHAiOjE3OTI3MDgyMDB9.H-9rZQzrkKqs5d_s3AKjfUKbcrtGEzcP7eQK0wKx1t0 " =2272x1193")

### Inclusive Mode (Recommended for NZ)

This is the recommended mode for NZ businesses, as it matches how Xero handles journal entries.


1. Set **Amounts Are** to `Tax Inclusive`
2. Enter the full (gross) amount in the Debit or Credit column
3. Set the GST Rate (e.g., 15)
4. The **GST Amount** and **Net Amount** columns show a preview of the split
5. Enter a balancing entry on the other side for the same gross amount
6. **Save**: The journal balances at the gross level. No GST rows appear yet.
7. **Submit**: The system automatically splits each GST-rated line into its net component and creates a separate GST posting row

**Example**: Recording a $115 expense (inclusive of GST):

| Step | Account | Debit | Credit | GST Rate |
|------|---------|-------|--------|----------|
| You enter | Travel Expenses | $115.00 |        | 15%      |
| You enter | Bank Account |       | $115.00 |          |
| **After save** | *Journal balances at $115 = $115. No GST rows.* |       |        |          |
| **After submit** | Travel Expenses | $100.00 |        |          |
|      | GST Account | $15.00 |        |          |
|      | Bank Account |       | $115.00 |          |

### Exclusive Mode


1. Set **Amounts Are** to `Tax Exclusive`
2. Enter the net amount in the Debit or Credit column
3. Set the GST Rate
4. A GST posting row appears **immediately** in the grid
5. Enter a balancing entry that includes the GST (net + GST)

**Example**: Recording a $100 expense (exclusive of GST):

| Step | Account | Debit | Credit | GST Rate |
|------|---------|-------|--------|----------|
| You enter | Travel Expenses | $100.00 |        | 15%      |
| Auto-created | GST Account | $15.00 |        |          |
| You enter | Bank Account |       | $115.00 |          |

### How the GST Account is Determined

The system automatically selects the correct GST account based on the type of account on each line:

| Account Type | GST Account Used | Reason |
|--------------|------------------|--------|
| **Expense**  | GST Paid (Input Tax) | Purchasing goods/services |
| **Asset**    | GST Paid (Input Tax) | Capital asset purchases |
| **Income**   | GST Collected (Output Tax) | Revenue with GST |
| **Liability** | GST Paid (Input Tax) | Most common: expense accruals |
| **Equity**   | No GST           | GST on equity entries is not applicable |

The GST accounts are discovered from your existing Sales and Purchase Tax Templates.

### Amending a Submitted Journal Entry

If you cancel and amend a submitted journal entry that used inclusive mode, the system automatically restores the original gross amounts. The amended journal entry returns to draft state with the full gross amounts, ready for editing and re-submission.

### Manual GST Override

If you need to adjust the calculated GST amount (e.g., to match a supplier's rounding), you can edit the **GST Amount** field on the source row. The system will use your manual amount instead of the calculated value.

## Inclusive Tax Templates

NexWave provides both inclusive and exclusive GST templates:

* **GST 15%**: Standard exclusive template (GST added on top)
* **GST 15% (Inclusive)**: Inclusive template (GST included in the amount)

These are available for both Sales and Purchase Tax Templates. If you do not see the inclusive variants, run the NZ Tax Setup from your Company settings.

## Key Differences: Inclusive vs Exclusive

| Aspect | Tax Inclusive | Tax Exclusive |
|--------|---------------|---------------|
| **You enter** | Gross amount (including GST) | Net amount (before GST) |
| **System calculates** | Net amount and GST from your entry | GST to add on top |
| **Grand total** | Same as what you entered | Your entry plus GST |
| **Common use** | NZ retail, receipts, supplier invoices | B2B wholesale, exports, AU invoicing |
| **JE draft behaviour** | Balances at gross, no GST rows | GST rows created immediately |
| **JE submit behaviour** | Splits into net + GST | No change (already split) |

## Related Documentation

* [Accounting](/doc/85b00666-859d-4e2b-9bac-6c1dd3848464) - Financial management overview
* [New Zealand GST Report](/doc/398030f2-bacc-4f47-b2b2-0f47943edc67) - Generate GST returns for IRD
* [Australia BAS Report](/doc/65bd41bf-cebd-4165-aa9f-188694004fb3) - Generate BAS returns for ATO