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Global withholding tax- Withholding tax posting behavior for Australian entities should be calculated based on gross amount of payment
With the current system behavior, the withholding tax amount is currently deducted from the payment. However, as per legal requirement in Australia referencing Documents quoting supplier's ABN | Australian Taxation Office, withholding tax should be calculated and recorded into the system based on gross amount of payment.
For instance, Vendor A issues an invoice for 100 AUD with a 5% WHT for Buyer B. When making the payment, Buyer B pays Vendor A the full 100 AUD and 5 AUD to the tax authority. This means the 5 AUD withholding liability is recorded as a WHT expense. The offset account for the journal should be Accounts Payable to Tax Authority, to be settled by the end of the month.
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