You need to use this option whenever you wish to create a new Tax account or Tax code for VAT/GST/Sales tax (Output tax as well as Input tax). 

You may also change the descriptions of an existing account, change the percentages on your various tax types and percentages whenever the legislation is amended, or to delete an existing account. 

The Tax codes and percentages, which apply for VAT/GST/Sales tax, are prescribed by VAT/GST/Sales tax or Tax Legislation and may be amended from time to time by the Tax Authorities.

Being registered for VAT/GST/Sales tax, you will have two basic accounts, i.e. Output tax that is charged when selling services or goods, and Input tax when you purchase from another registered VAT/GST/Sales tax vendor. 

TurboCASH4 will have setup an Output VAT/GST/Sales tax and an Input VAT/GST/Sales tax account as sub-accounts of the VAT/GST/Sales tax Control Account as Current Liabilities for you in the templates. 

The Tax codes and percentages differ from country to country and you may be required to change the percentages and create new codes whenever the legislation changes.

It is of utmost importance that you create these codes and percentages correctly to suit your needs and the requirements of legislation applicable to your country. You have to create, or add the Tax accounts (Tax codes), which you will need to fill in your VAT/GST/Sales tax return. TurboCASH4 will generate the necessary Tax or VAT/GST/Sales tax reports for your Tax codes.

Ensure that your Tax codes (VAT/GST/Sales tax accounts) are entered in this menu; otherwise the applicable Tax rates and the dates on which the Tax rates are applicable will not work.

These Tax codes, or Tax accounts, should be created as sub-accounts. Before you can create the Tax codes you need the following two General ledger accounts created in the Edit → Accounts menu: 

1.VAT/GST/Sales tax Control Account - the main account which will be used as a totalling account for the Tax codes created in this menu.

2.VAT/GST/Sales tax Payments Account - the sub-account which you need to allocate your Tax payable (as submitted on your VAT/GST/Sales tax returns) when you make payments in the payments journal to the Tax Authorities.

In cases where the Input tax is more than the Output tax, you need to allocate the refunds received from the Tax Authorities in the receipts journal.

The Tax codes need to be created within the account codes or numbers of these two General ledger accounts. For each of the VAT/GST/Sales tax items on the VAT/GST/Sales tax return, you need to have a Tax code, which will contain the description and percentage as prescribed by legislation for your country. In South Africa, some of the VAT/GST/Sales tax codes, as shown on the VAT Return Form (for South Africa) are as follows:

Block on VAT Return

Tax Code

Short Description


Output tax - Standard Goods - 15%

Selling of Goods and Services


Output tax - Standard Goods (Capital) - 15%

Selling of redundant equipment (old computers / vehicles, etc.)


Output tax - Zero Rated - 0%

This is Taxable Supplies, but is rated at a zero rate or percentage (0%).


Input tax - Standard Goods - 15%

Purchases of goods and services, for which you have a valid Tax Invoice from a registered VAT vendor. 

If you do not have a Tax Invoice or certain items are excluded from VAT (e.g. Tea refreshments, staff parties, expenses relating to exempt supplies, etc.) you need to select "No tax" for the specific transaction.


Input tax - Capital Goods - 15%

Purchases of Capital goods or services, which will be used in the business.


Adjustments - Bad Debts

If VAT was charged to Debtor (customer / client) accounts, and VAT (Output tax) was submitted and paid over on a previous VAT return, and the amount is irrecoverable, the bad debts selling price - exclusive of VAT must be written off as bad debts and the tax amount to this Tax code. 

You need to keep proof that you have made attempts to collect this debt.

 To create a new Tax account (Tax code):

1.Click on the Edit → Accounts menu.  The "Accounts" screen; listing your available accounts will be displayed. 

2.Select the Tax Control Account (as in this case, “G860-000 VAT Control Account”).

TurboCASH4 - Edit Tax (VAT/GST/Sales tax accounts

2.Select the Tax Control Account (as in this case, “G850-000 VAT Control Account”) and click on the (Add:Account) icon. An Entry for the new Ledger account is displayed as “G850 000 Account name” on the Account list. The reason for this, is that we need to create a Tax code, which is a Sub-account for the Tax main account (i.e. “VAT Control Account”).

3.Enter or select the following:        

a)Account type - Select “Tax account”.

b)Account no. - The Main account “850” is displayed and cannot be edited. Type “030” in the sub-account field.

c)Description - Replace Account name with the new Tax code description e.g. “Input VAT – Capital Goods”.

d)Account group 1 - “Current Liabilities” should be displayed. This is the Account group which is linked to the Main account. 

e)Account group 2 - Select Account group 2, if not selected.

f)Account type - “Balance” should be displayed. This field cannot be selected, since the Main account is a Balance sheet account type.

g)Sub-accounts - This field cannot be selected, since this is a sub-account. 

h)Status - “Enabled” (default) should be selected.

i)Open item account - “No” (default) should be selected.

j)Link Tax - “Empty” (default) should be selected.

4.Click on the Tax tab. 

5.Enter the Percentage. In the case of a Zero rated tax, enter the tax rate of “0” percent.

6.Use link tax - Not applicable to this example. If you tick this option, you may link the tax code to another tax code from the list. 

7.Click on the Save button. The account will automatically be placed in the correct structure of the Account list.

The icon will change from (Assets / Liabilities) to (Tax account).