There are all sort of Expenses that occurs when you run a business. Some of the expenses include a tax (such as the Goods and Services Tax) and some of the expenses do not incur a tax. There are pre-set Expenses Types in the system, but they may not be suitable to you. You may for example operate in a country, where there are no taxes paid on goods and services provisions. Or some items do not incur a tax, as for example you get the services from another country (example: web hosting). For this purpose you can make up your own Expense item. For each Item you must select if a Tax is payable or not. If you have an Expense type, that incurs a tax, but sometimes this expense type does not incure a tax, you will need to create two expense types, one with tax and one without tax, like for instance: Internet Services (Taxed), Intenernet Services(Not Taxed).

You must make sure the item is selected as Taxed, if you can get a refund for this item from the tax office. If the item does not provide you with a tax office refund, then mark it as untaxed.

If for example you were to purchase fruits and vegetable in Australia, these are tax free, so you would not be paying any tax on these goods to the product provider and therefor you cannot claim a tax back from the tax office. If on the other hand you were to purchase shoes, you would be paying a tax to the shoe provider which you can claim back from the tax office. It is absolutely imparative to get this correct, as when this software generates the tax activity reports, it will determine how much tax the government owes you and how much tax you owe to the governement on the bases of this expense type.

The Tax Type Management form consists of two tab pages, namely COMMON SYSTEM PAYMENTS and CREATE YOUR OWN CUSTOMIZED PAYMENTS. The system payment cannot be changed and you are not forced to use them if they don't apply to your circumstances. 

A form will pop up which is not completely shown in here as this is very simple. You can add, change and delete payment type. Once a payment type is used, it should not be changed, updated or deleted. It is advisable to create a new one. To determine if this payment type is taxable, select it in the Form Table and check or uncheck the Expense Item is taxable check box.