Invoice tax handling in Xero

The tax configuration for invoices (whether amounts are tax inclusive or exclusive) is controlled within Xero.

Managing tax settings in Xero is essential for ensuring that your invoices reflect the correct tax treatment, whether GST inclusive or exclusive. Xero allows you to control tax settings at both the customer level and the general financial settings level, ensuring that your invoices align with your business requirements.

To modify this setting in Xero:

There are multiple ways to configure tax settings in Xero, including customer-specific settings and general financial settings.

1. Log in to Xero as an administrator.
2. Click Accounting in the top menu.
3. Select Advanced and then click Financial Settings.
4. Scroll down to the Tax Defaults section.
5. Under For Sales, choose either Tax Inclusive or Tax Exclusive.

Do not leave this set to Remember previous. SortScape cannot follow that Xero option, so invoices will default to tax inclusive (or tax exclusive for US and Canadian organisations). Pick Tax Inclusive or Tax Exclusive as your usual setting instead.

Once updated, invoices generated from SortScape and sent to Xero will follow this setting.

Customer-specific tax settings take priority over the organisation default. Use this when one customer should be treated differently from your usual For Sales default (for example, most invoices are plus GST, but one customer is GST inclusive).

To set tax defaults on a Xero contact:

1. In Xero, click Contacts, then All contacts.
2. Search for the customer and click their name to open the contact.
3. Click Edit.
4. Scroll down to Financial details.
5. Under Sales defaults, set Sales tax to the GST rate that contact should use (for example 15% GST on Income).
6. Still under Sales defaults, set Amounts are to Tax exclusive (plus GST) or Tax inclusive.
7. Click Save.

New invoices created from SortScape for that contact will use those sales defaults.