Your supplier’s tax invoice shows GST of $1,234.57. Business Central has calculated $1,234.56. It is one cent, but Accounts Payable now cannot post the invoice for the amount the supplier actually billed, the payable will not agree to the statement, and someone has to decide what to do about it.
This is a normal result of two systems rounding differently, and Business Central has a built in way to handle it. The feature is called GST Difference. It lets a user override the calculated GST on a document or a journal line, within a limit that you control.
This article covers when to use it, how to set it up across purchases, sales, journals and foreign currency, how to apply it on a purchase invoice, and what it does to your GST reporting.
Applies to: Microsoft Dynamics 365 Business Central, Australian localisation. In other localisations the same fields appear as VAT rather than GST, and the behaviour is identical.
Why the GST amount does not always match
A few common causes:
- Line by line rounding. Many supplier systems calculate and round GST on every line and then add up. Business Central calculates GST per GST identifier across the document and rounds once. On an invoice with a lot of lines the two answers can drift apart by a few cents.
- Mixed supplies. Invoices that combine taxable and GST free lines, particularly where the supplier has apportioned differently to your item or G/L account setup.
- GST inclusive pricing. Where the supplier quotes GST inclusive prices and works backwards using the one eleventh rule, the reverse calculation can land a cent away from a forward calculation.
Before you reach for GST Difference, check the underlying setup. If every invoice from a particular supplier is out, and out by the same amount, the cause is more likely the GST Posting Setup, the GST Rounding Type, the invoice rounding precision, or the Prices Including GST setting on the vendor card. GST Difference is designed for genuine one off rounding variances. It is not a way to paper over a configuration problem, and using it that way just moves the error into your GST account.
What a GST difference actually changes
Only the GST amount moves. The GST base stays where it is, so the expense or asset value posted to the general ledger does not change. What changes is the GST amount, and with it the total including GST.
Using the example later in this article, an invoice of $1,000.00 plus $100.00 GST becomes $1,000.00 plus $99.00 GST, and the amount owing to the supplier becomes $1,099.00 rather than $1,100.00.
That is the whole point of the exercise. Your payable now agrees to the supplier’s document, and the input tax credit you claim agrees to the GST printed on their tax invoice.
Decide your tolerance before you switch it on
The maximum allowable difference is a single company wide figure, so set it deliberately. Rounding variances are cents. A limit of 0.05 or 0.10 covers the real use case comfortably.
Setting it to $5 or $10 gives every user who can enter a purchase invoice the ability to change the GST on any document by that amount, with no approval and no second pair of eyes. On a few hundred invoices a month that is a meaningful control weakness rather than a convenience.
Note on the screenshots below: we have used 5.00 so the adjustment is easy to see. In a live environment, use a much smaller number.
Step 1: Set the maximum GST difference
Open the General Ledger Setup page. Search General ledger setup, and select the page.
On the General FastTab, enter a value in the Max. GST Difference Allowed field. You may need to choose Show more before the field appears.
This figure is the maximum the manually entered GST may differ from the GST that Business Central calculated. It is not a cap on the GST amount itself. With a limit of 5.00, an invoice where Business Central calculates $100.00 of GST will accept any figure between $95.00 and $105.00.
While you are on this page, GST Rounding Type and the rounding precision fields sit close by. If you are seeing consistent differences rather than the occasional cent, that is where to look first.
Step 2: Turn on Allow GST Difference where you need it
Setting the maximum on its own does nothing. You also have to enable the override in each area where you want it available.
Purchases
Open Purchases & Payables Setup and turn on Allow GST Difference.
Sales
The same field sits on Sales & Receivables Setup.
This is the area I would think about most carefully. With purchases, you are usually matching the GST amount shown on a supplier’s tax invoice. With sales, you are changing the GST your organisation reports as collected, as well as the GST shown on the tax invoice your customer will rely on to claim their own credit. For that reason, many organisations choose to allow GST differences on purchases only.
Step 3: Adjust the GST on a purchase invoice
With the setup done, a user can override the calculated GST on the document itself.
In this example the invoice is for $1,000.00, Business Central has calculated $100.00 of GST, and the total is $1,100.00. The supplier’s tax invoice shows $99.00 of GST.
Open the purchase invoice and choose Invoice then Statistics, or simply press F7.
In the Lines section of the Statistics page, click into GST Amount and type the figure from the supplier’s invoice. Each row represents one GST rate, so an invoice with twenty lines all at 10 percent still shows a single row here. Choose Close and the document recalculates.
Version note: Microsoft has redesigned the document statistics pages in recent releases. Depending on the version you are running, you may reach the same figures through the Invoicing FastTab and the No. of Tax Lines field rather than a Lines section. The field you edit is still GST Amount and the behaviour is the same.
What happens if you go over the limit
Business Central blocks the entry and tells you the current limit. In the example below the maximum had been set to 1.00, and a user attempted to change the GST from 100.00 to 93.00.
Read the message carefully, because it is about the difference, not the amount. A difference of 7.00 against a limit of 1.00 is rejected. When this fires in practice it usually means one of two things: the user has mistyped, or the variance is larger than a rounding difference and the invoice deserves a proper look rather than an override.
Step 4: Check the document before posting
Back on the invoice, Total GST now reads 99.00 and Total Incl. GST reads 1,099.00. Total Excl. GST is untouched at 1,000.00, which confirms the expense side has not moved.
Tip: Add the GST Difference column to the invoice lines using Personalise if you want the variance visible on the document itself rather than only inside Statistics. It makes review much easier for whoever approves the invoice.
Good practice
- Keep the limit small. A tolerance of 0.05 or 0.10 handles rounding. Anything larger turns a data entry decision into an approval decision, and should be treated as one.
- Restrict who can edit General Ledger Setup, Purchases & Payables Setup and Sales & Receivables Setup. The tolerance is only as strong as the permissions around it.
- Consider enabling the override on purchases only, and leaving sales documents to calculate GST themselves.
- If one supplier is consistently out, fix the cause rather than the symptom. Check their GST Bus. Posting Group, the GST Prod. Posting Groups on the lines, and whether Prices Including GST matches the way they bill you.
- Review adjustments periodically. A sudden rise in overrides usually points at a master data or integration problem upstream.
Frequently asked questions
Does adjusting the GST change the expense that gets posted?
No. Only the GST amount and the total including GST change. The GST base, and therefore the expense or asset, stays where it was.
Can I adjust the GST after the invoice has been posted?
Not on the posted document. You would either cancel or credit the posted invoice and re-enter it correctly, or post a GST only adjustment through a general journal where the rest of the invoice is fine.
Can I give different users different limits?
Not with standard functionality. The maximum is a single company wide value. If you need per user control, that is a permissions and approval workflow conversation rather than a setup field.
Need a hand with GST setup in Business Central?
GST differences are usually a small symptom of something worth checking properly, whether that is posting group setup, supplier master data, or how invoices arrive in your system. If your team is spending time on GST variances every month, we are happy to take a look.
Get in touch with the EBS team to talk it through.