How to post the purchase of trade goods in KPiR?
Posting commercial goods in the tax revenue and expense ledger may seem like a very simple thing. In practice, it turns out that some situations can cause entrepreneurs a lot of problems. For example, how to accurately determine the moment of recognition of purchases in the ledger of revenues and expenses? You can find the answer to this and other questions about how to post the purchase of trade goods below.
Trade goods - definition
Trade goods are goods purchased and intended for resale unprocessed. Trade goods are also by-products obtained from running special departments of agricultural production.
Purchase of commercial goods - recognition in the KPiR
For the taxpayer, the expenses incurred for the purchase of commercial goods are tax deductible expenses. Such a purchase should be recorded in the tax revenue and expense ledger at purchase prices.
§ 3 point 2 of the Regulation on the KPiR
“purchase price - the price that the buyer pays for the purchased assets, less tax on goods and services, subject to deduction in accordance with separate regulations, and on import increased by the duty due, excise tax and additional customs fees, reduced by rebates, discounts, other similar the reduction, and in the case of receipt of an asset by gift or inheritance - the value corresponding to the purchase price of the same or a similar asset.”
The purchase of commercial goods must be entered in the tax revenue and expense ledger immediately upon receipt, at the latest before transfer to the warehouse or sale. This applies to both taxpayers who have adopted the cash and accrual method of accounting for costs.
In the tax ledger of revenues and expenditures, column 10 is designated for the accounting of costs related to the purchase of commercial goods, "Purchase of commercial goods and basic materials" at purchase prices.
Commercial goods - proof of purchase
The ordinance of the Minister of Finance on keeping the tax book of revenues and expenditures defines which accounting documents are the basis for making entries in it. These are, among others VAT invoices (in particular VAT-margin invoices, VAT RR invoices, MP VAT invoices), customs documents, bills as well as corrective invoices and correction notes. Thus, the basic document confirming the transaction is the purchase invoice, which is the basis for an entry in the tax book of revenues and expenses.
If the expenditure for the purchase of commercial goods was paid in cash, it should be noted that the invoice should contain the annotation "paid in cash" or issued to KP for the invoice. The mere statement "method of payment - cash" does not mean that the invoice for the purchase of goods has been paid. This is important from the point of view of income tax and VAT.
It happens that the purchase of commercial goods is also made from a natural person who does not conduct business activity - then the document confirming the purchase will be a sales contract (commonly known as a purchase and sale contract).
Commercial goods - goods before invoice
Pursuant to the Act, the purchase of commercial goods must be recognized in the tax revenue and expense ledger immediately upon receipt, at the latest before being transferred to the warehouse or for sale. Fulfilling the requirements referred to in the regulations is not a problem if the taxpayer has received a VAT invoice together with the purchased goods. However, due to the changes that came into force on 1 January 2014, it often happens that the entrepreneur first receives the purchased goods, and only after some time the invoice. This is due to the fact that the seller has the right to issue an invoice no later than on the 15th day of the month following the month in which the goods were delivered or the service was performed.
Pursuant to the provision of par. 16 of the Regulation of the Minister of Finance of August 26, 2003 on keeping a tax book of revenues and expenses, in such a situation, the taxpayer should prepare a detailed description of the purchased commercial goods, which will then be the basis for making an entry in the KPiR. This description should include:
- name, surname (company) and address of the supplier,
- quantity and type of commercial goods purchased,
- unit price,
- value of commercial goods.
The description must be dated and signed by the person who accepted the goods. The taxpayer should keep this document as it is a proof of the entry in the KPiR. Upon receipt of the VAT invoice from the supplier, it must be accompanied by a previously prepared description.
If it turns out that the amount on the invoice is different than the recorded amount, then on the basis of the description, the difference should be included in the tax revenue and expenditure ledger with the date of receipt of the invoice.
Commercial goods - handing over to the company's internal needs
The definition of a commercial commodity says that its purchase is made for resale. There are situations when the entrepreneur decides to use some of the purchased goods for the internal needs of his company. For example, a taxpayer who runs an office supplies store has decided to allocate some commercial goods (e.g. binders) to the needs of the business. This situation will prevent the intended sales revenue from being achieved. Therefore, it is important that such situations are properly documented and corrected in the tax revenue and expense ledger.
The transfer of a trade item for the internal needs of the company should be corrected in the revenue and expense ledger by making an adjustment in column 10. "Purchase of trade goods and basic materials". The cost should appear in column 13. "Other Business Related Expenses".
Moving commercial goods for internal purposes of the company does not result in the need to correct the input VAT when purchasing them.
The basis for the transfer is an internal document or a warehouse document "IE". These documents should be drawn up at the time of taking the commercial goods. They should include:
- consecutive number of the document,
- situation description,
- name of the transferred goods,
- value of the transferred goods.
Start a free 30-day trial period with no strings attached!
Commercial goods - purchase side costs
Incidental purchase costs include payment for transport, loading and unloading. These values must be included in the revenue and expense ledger in column 11. “Purchase side costs”. Insurance costs, e.g. insurance in transit (which also count as incidental costs) are booked on the basis of policies and other documents issued by insurance companies.
The exception to the above rule is the transport costs incurred in connection with the purchase of commercial goods. The taxpayer should enter it into column 13 of the KPiR “Other business-related expenses” as this cost is not related to the purchase of the goods.
Assigning an expense related to transport costs to the wrong column in the tax revenue and expense ledger will have no effect on the calculation of the income tax advance payment. However, in order for the book kept to be reliable, attention should be paid to the fact that the entries in it comply with the provisions of the Regulation of the Minister of Finance.
Start a free 30-day trial period with no strings attached!