You may be paying a supplier who hasn’t given you a valid ABN. In this case the ATO expects you to withhold 49% of the payment and remit it to the ATO via the BAS/IAS. To do this you can enter a Purchase transaction as per the following example for $1,000 but no ABN has been supplied:
- First go to Settings > Tax Codes.
- Choose Show all “inactive” codes.
- Click to open the W4 – Withheld Payment (No ABN) tax code.
- Set this code to Active and tick the Visible on Purchases option.
- Enter a Purchase transaction with these lines:
Account Tax Code Amount Expense: Consulting Fees 535 Expense: Consulting Fees W4 465 Liability: ABN Withholding Tax Payable -465 - Later when you pay your BAS/IAS you will code the ABN withholding portion to the Liability: ABN Withholding Tax Payable account to clear it.