Freeman Software and the GST Rate

There has been a lot of discussion recently about the Government changing the GST Rate as part of its review of New Zealand's tax system. While most of this discussion has been around how the changes affect families there is some disturbing talk about the effects on business.

The Dominion Post's (15 Feb 2010) article titled 'Businesses could face 'enormous' bill for GST software changes' is one such scary article. This article goes on to say ...

Any system that creates an invoice or manages accounting functions is going to need to be modified.
Wrong! In Freeman Software's Business System - a simple 'control' field is all that needs to be changed, by you. No software change is required.

Firms using software developed for New Zealand and Australia which have different GST rates cannot just enter in a new rate, as this will upset invoicing data generated before the change.
Wrong again! One simple change as indicated above will set a new GST rate for NEW invoices but will not change existing invoices. All you have to do is change the rate at the right time and you're set.

With Freeman Software's Business Management System the change of GST rate is a simple and straight-forward event that will take you under a minute to complete. Let's see how...

So how do I change the GST Rate?

Follow these simple steps...

Wait until the night before the change is to take place
On the main menu select [System]
Select [Control File Maintenance]
On the first tab, change the GST Rate from 12.5 to 15.0 (the proposed new rate)
Press the [Save] button

All done, the new GST Rate will be charged from now on!

Okay, but what about my existing invoices?

As a user of Freeman Software's Business Management System, you will have seen that each Sales Order and each Invoice holds its own GST Rate. This is so that you can charge different rates if and when required. The other, important, impact of this is that all your existing invoices hold the correct rate for the date on which they were created. No change is required.

What if I have to back-date Orders or Invoices?

Freeman Software cannot and will not give any legal view on this question. However, if your Accountant is happy for you to do this, simply enter the old (12.5%) rate on the back-dated invoice and GST will be charged at that rate.

My Prices are GST Inclusive. What should I do?

Freeman Software cannot advise you on what to do about your prices. However, if you want to increase all your prices in one easy step, use the following...

On the main menu select [Inventory Control]
Select the [Input New Prices] option. This may be in a [Setup] menu.
Enter the rate of increase you want add and the date on which you want the new prices to start.
Check the new prices. Note that you need to be extremely careful about prices that are important to your marketing activities. Prices like $9.90 may have much more impact than, say, $9.93 so you may want to manually adjust these after you have added your 'bulk' increase.
When you are happy with your new prices, press [Save]
Print a Price List and double-check your new prices.

All done. Your old prices are still in the system and the new prices become active on the date you selected.

I have other questions. What should I do?