View and set up the Tax Account Movements

Tax Account Movements Overview

Click the Reports tab > Tax Account Movements.

On the Tax Account Movements tab you will find two reports; the Tax Account Movements and the Ledger Reconciliation (at the bottom of the page).

Once you set up the Tax Account Movements report, the system automatically populates the prior period adjustments, current period adjustments, all payments and transactions, and calculates the closing balance of the tax provision. You can add journal entries for adjustments at any time.

By default, the system:

• Displays the current tax balance on an aged basis.
• Reconciles the report with the Current Tax Proof and Deferred Tax Proof, so you can see if the proofs equal the movements for the year and identify any discrepancies.
• Reconciles the report with the ledger and provides the required journal entries.

With the Settings button , you can turn the following options off (and on again):

• show aged current tax;
• automatically reconcile with current tax balance;
• automatically reconcile with deferred tax balance;
• automatically reconcile with the ledger.

Add opening balances

• On the Tax Account Movements tab, click New > Opening Balance.
• Optional: Edit the default date, tax year and journal narration.
• Optional: Edit the default journal entry Type settings – if you want to also include the balances in the Current Tax Proof and Ledger Reconciliation, select the applicable check boxes.
• Enter the opening balances.
• Optional: Add a note.
• Click Save.

Add a prior period adjustment

You can manually add a journal entry for a prior period adjustment (PPA) for current or deferred tax.

You only need to add a manual PPA in the first tax year. Once you are in the second tax year, and have at least two versions of the first year calculation, you can get the system to create an automated PPA for you.

Add a manual prior period adjustment

1. On the Tax Account Movements tab, click New > Journal Entry – Prior Period Adjustment.
2. Optional: Edit the default date, tax year and journal narration.
3. Optional: Edit the default journal entry Type settings – if you want to also include the adjustment in the Current Tax, select that check box.
4. Add the prior period adjustment.
5. Optional: Add a note.
6. Click Save.

Create an automated prior period adjustment

1. On the Tax Account Movements tab, click New > Journal Entry – Automated Prior Period Adjustment.
2. Optional: Edit the default date and journal narration.
3. Optional: If you want to also include the adjustment in the Current Tax, select that check box.
4. Optional: Add a note.
5. In the first Version drop-down list, select the version and year that you want the PPA to be calculated from.
6. In the second Version drop-down list, select the version and year that you want to compare the above version with.
7. View the side-by-side Statement of Tax Income and the journal entry (PPA) that will be created.
8. Click the Create Journal button.

Delete an automated PPA

1. On the Tax Account Movements tab, click the PPA to open it.
2. Click the Delete button.

Add a current period adjustment

1. On the Tax Account Movements tab, click New > Journal Entry – Current Period Adjustments.
2. Optional: Edit the default date, tax year and journal narration.
3. Optional: Edit the default journal entry Type settings – if you want to also include the tax charge in the Current Tax Proof and Ledger Reconciliation, select the applicable check boxes.
4. Add the current period adjustment.
5. Optional: Add a note.
6. Click Save.

Reconcile with the ledger

The closing tax balances in Taxlab system may not match what is in your accounting system or general ledger. Once you have assigned or manually added the relevant accounts in the trial balance to current and deferred tax, and the tax expenses, Taxlab determines the journal entries that are required for the accounting system to match the balances.

Assign the tax accounts

As part of the trial balance set up process, you should have assigned the relevant accounts to the tax balances.

Add opening balances to the ledger

1. On the Tax Account Movements tab, click New > Opening Ledger Balance.
2. Optional: Edit the default date, tax year and journal narration.
3. Optional: Edit the default journal entry Type settings – if you want to also include the balances in the Tax Account Movements or Current Tax Proof, select the applicable check boxes.
4. Add the opening balance.
5. Optional: Add a note.
6. Click Save.

Add a journal entry to the Ledger

1. On the Tax Account Movements tab, click the New button, then click Journal Entry Required.
2. Optional: Edit the default date, tax year and journal narration.
3. Optional: Edit the default journal entry Type settings – if you want to also include the tax charge in the Tax Account Movements or Current Tax Proof, select the applicable check boxes.
4. Add the journal entry.
5. Optional: Add a note.
6. Click Save.

View the journal entries required

Once you have added the opening balances, assigned the tax accounts, made any manual adjustments, go back to the Tax Accounts Movements report. The difference between the balance according to Taxlab and the balance according to the accounting system displays in the Journal Entries Required section. These are the journal entries you need to add into your Accounting system.

View the sense checks

On the Tax Account Movements tab, click the Sense Checks tab to see if the system identified any discrepancies within the tax calculation. You should resolve any issues so that all checks pass.