Tax and rounding

Every total on a quotation, invoice or credit note comes from its lines, worked out the same way on the screen, on the PDF and on every reprint. This page explains each step, where the rounding happens, and why the GST can be a cent away from a figure you work out line by line.

How it fits together

The figures build up in four layers:

• Lines — each line’s amount is its Qty times its Unit price.
• Rates — the lines at one tax rate are added up, and that sum is taxed once.
• Document — Subtotal is the sum of the lines, the tax is the sum of the rates’ taxes, and Total is the two added together.
• Amount payable — when an invoice is issued, its printed Total becomes the amount the customer owes. Payments, credit notes, Balance due and the customer’s statement all work from it.

Unless your country sets its own rounding rule (see Good to know), rounding to the currency’s smallest unit happens only where a figure is shown or printed, never part-way through the arithmetic.

How it works

1. Line amount. Qty takes up to two decimal places and Unit price up to four. easySales keeps each line amount to four decimal places, and shows it rounded to the cent.
2. Tax per rate. A line without its own rate takes the document’s rate; a line at GST 0% is a rate of its own. For each rate, easySales adds up the line amounts and multiplies the sum by the rate, once. No line carries a tax amount of its own.
3. Totals. The document’s tax is the sum of the per-rate taxes. Subtotal and the tax are each rounded to the cent, half away from zero (0.005 becomes 0.01), and Total is the sum of those two rounded figures. So Subtotal plus the tax always equals Total exactly.
4. Other currencies. The cent is the currency’s smallest unit: two decimal places for SGD, MYR or USD, none for JPY, KRW or VND, three for KWD, BHD or OMR.
5. Several rates. The PDF prints one tax row per rate above the total tax row. If the rows, rounded one by one, would not add up to the total tax, the rows with the largest rounding differences are moved by a cent until they do. A row moves at most one cent from its own rounding, and a 0% row never moves. The document page shows a single tax row.
6. At issue. The amount payable is fixed at the printed Total. A credit note reduces the invoice by its own printed total, so a credit note that repeats the invoice’s lines clears it exactly.

Good to know

• A line discount or a document discount comes off before tax, so the tax is worked out on the discounted amount. On a document with several rates, the document discount is shared across the rates in proportion, to the cent — see Give a discount.
• A Prompt-payment discount recorded with a payment becomes a credit note split across the invoice’s rates. Some amounts cannot come out exactly once its net and tax are each rounded; the dialog then says so and suggests the nearest higher amount that can.
• A small balance written off at payment, for example with the reason Rounding, does not change the GST.
• Where your country sets its own rounding rule, such as Japan, System settings → Tax shows Tax rounding. The amount at each rate is then rounded to the currency’s unit first, and the tax is rounded once per rate by the method you choose: Round down, Round up or Round half up.

Terms

• Line amount — Qty × Unit price, before tax.
• Taxable amount — the sum of the line amounts at one rate.
• Amount payable — what an issued invoice is settled against: its printed Total.
• Rounding row — a printed line showing the difference between an invoice’s printed total and its amount payable.

Common misunderstandings

• The GST is not the sum of each line’s GST. It is worked out once per rate.
• The printed line amounts need not add up exactly to Subtotal. Each line is rounded for display, while Subtotal rounds the exact sum.
• A cent of difference is not an error to correct with a credit note. It is the rounding method, applied the same way every time.

Where to find it

The totals are at the foot of the lines on every quotation, invoice and credit note: Subtotal, the tax row and Total. Preview the PDF to see the per-rate tax rows; see Invoice PDF. Rates and the Tax rounding setting are under System settings → Tax; see Company and tax.

Why it works this way

One tax per rate is the method IRAS accepts and e-invoicing expects. IRAS lets you round the total GST to the nearest cent and accepts working it out either per line or on the total, as long as you use one method consistently. easySales always taxes the total at each rate, which is also the figure an e-invoice reports for each rate.

Rounding only at the end keeps cents from piling up. Rounding every line, then every rate, then the total, can drift by several cents on a long invoice. Keeping four decimal places until a figure is shown means the printed tax is worked out from the exact amounts, not from figures already rounded to the cent.

The page always adds up. Your customer checks your invoice by adding it up: Subtotal plus the tax must equal Total, and the rate rows must equal the total tax. Rounding each printed figure and adding the rounded figures guarantees both, so nobody has to explain a cent on the paper.

The customer pays what they were shown. Fixing the amount payable at the printed Total when you issue means a payment of exactly that amount settles the invoice, with nothing left owing and no overpayment refused.

Work faster

• Trust the Total row while you edit. The Total on the draft is the figure the PDF prints and the customer will owe; there is nothing to recalculate. See Create an invoice.
• Use the discount fields. A line discount or a document discount shows the saving and lowers the GST with it. See Give a discount.
• Clear a stray cent in the receipt dialog. Under Small balances left in Record receipt, write off a cent with the reason Rounding; you need the Write off small payment differences permission. See Record payment differences.
• Mix rates on one document. Tick Per-line tax rates and give a zero-rated line its own tax, rather than splitting one sale across two invoices. See Line items.
• Check the PDF for the rate rows. PDF shows exactly what your customer will see, including one row per rate. See Invoice PDF.

Examples

Lim & Co is GST-registered in Singapore and charges GST 9%.

Three lines, one rate. Mei Tan invoices Harbour Café for soft furnishings:

Item	Amount	GST if worked out per line
Cushion covers	SGD 45.50	45.50 × 9% = 4.095, rounded 4.10
Table runners	SGD 32.50	32.50 × 9% = 2.925, rounded 2.93
Napkin sets	SGD 18.50	18.50 × 9% = 1.665, rounded 1.67
Total	SGD 96.50	SGD 8.70

easySales taxes the rate once: 96.50 × 9% = 8.685, printed SGD 8.69. The invoice reads Subtotal SGD 96.50, GST SGD 8.69, Total SGD 105.19, and that is the amount payable. The café’s accountant, adding the GST line by line, gets SGD 8.70; both methods are accepted, and the invoice is right as printed.

Hours that leave half a cent. Daniel Lim bills design hours at SGD 85.50 an hour:

Item	Qty	Unit price	Exact amount	Printed
Site visit	1.25	85.50	106.875	106.88
Design revision	2.75	85.50	235.125	235.13

The printed lines add up to SGD 342.01, but Subtotal is the exact sum, 106.875 + 235.125 = SGD 342.00. GST is 342.00 × 9% = SGD 30.78, and Total is SGD 372.78.

A discount that cannot be exact. Harbour Café pays SGD 104.04 on the SGD 105.19 invoice above and takes the SGD 1.15 left as an early-payment discount. In Record receipt, Mei chooses Prompt-payment discount. The dialog says the credit note cannot come to exactly SGD 1.15. The rounding explains why: a net of SGD 1.05 has GST of 0.0945, printed 0.09, so the note is SGD 1.14; a net of SGD 1.06 has GST of 0.0954, printed 0.10, so the note is SGD 1.16. The dialog suggests allocating SGD 0.01 less of the payment to the invoice, so the discount is SGD 1.16 and the SGD 0.01 stays on the account as credit. Mei does that, and the invoice is settled.

Common questions

• Why is the GST on my invoice one cent different from adding up each line? easySales works out the GST once on the total of each rate and rounds it once. Rounding each line first can move the sum by a cent or more.
• Does easySales calculate GST per line or on the total? On the total of each rate. A line has a rate but no tax amount of its own.
• Is rounding GST on the total allowed in Singapore? Yes. IRAS lets you round the total GST to the nearest cent and accepts either method if you use it consistently. See GST and tax invoices.
• Why don’t my line amounts add up to the subtotal? A line whose Qty × Unit price has more than two decimal places is shown rounded, while Subtotal rounds the exact sum of the lines.
• What is the Rounding row on an invoice? The difference, at most one cent, between the printed total and the amount the invoice is payable at. The balance starts from the amount payable. See Documents and templates.
• Can I change how easySales rounds tax? Only where your country’s rules let you choose, such as Japan, under Tax rounding in System settings → Tax. For Singapore there is no setting.
• Why can’t my prompt-payment discount be an exact amount? The credit note’s net and GST are each rounded to the cent, so a few amounts cannot be reached; at 9%, SGD 0.06 and SGD 1.15 are two of them. The dialog suggests the nearest higher amount that can. See Record payment differences.

Related

• GST and tax invoices
• Line items
• Invoice PDF
• Record payment differences