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 Correcting Input Tax

Use

If the actual usage of an object, for which you deducted input tax, is different from the planned usage, then you need to correct the input tax starting from the date of the actual usage.

Prerequisites

Customizing

You made the necessary settings for input tax correction in Customizing (see Executing Input Tax Corrections ).

Master Data and Flow Data:

  • You created correction objects.

  • You assigned line items, which are relevant for input tax, to the correction objects.

  • You determined the option rates on a monthly basis, and you distributed and deducted the input tax for the account assignment objects.

  • You entered the date of first use and the correction period in the master data of the correction object. The status of the correction object is set to For Correction .

Features

When calculating the input tax correction, the system compares the current actual usage (on the key date of the calculation) with the usage information used for the input tax distribution. If the two are different, so that the option rate has changed, you have to correct the input tax deduction.

During the correction run, the system determines the correction basis for each correction object, using the documents assigned to this object that were posted up to the date of the run. It calculates the correction amount using the currently valid option rate of the correction object and the correction period. This amount is then calculated proportionally for the year based on the key date and balanced against the corrections already posted in the year. The trivial amount limits are also taken into account.

A distinction is made between objects that are used once and those used more than once in order to generate revenue:

  • In the case of one-time usage, the input tax correction is made at the time of the actual usage. The system determines the difference between the deductible input tax based on the current option rate and the deductible input tax determined by the input distribution. Based on this information, the system creates the correction postings.

  • For objects that are used more than once to generate revenue, the correction is on a pro rata basis within the defined correction period.

    Using this formula, the system calculates the monthly correction amount :

    = (current option rate – distribution option rate)

    * total amount of input tax due on the service

     / number of correction months

You use the type of correction object to specify whether the correction object is for one-time correction or for correction over time during the correction period.

There are two types of correction run:

  • Mid-year correction run:

    For this correction run, you enter the current calendar month and year. The key date of the calculation is the last day of the month entered. The system calculates the proportional amount of the correction that applies to the entered correction year. It then balances this amount against the corrections already posted for this calendar year.

    Example Example

    Based on the current situation, the total amount of the correction for the year 2001 should be 12,000 euros. During the correction run for January 2001, the system calculated and posted 1,000 euros (1/12).

    In a subsequent correction run for March 2001 (the run for February 2001 was skipped by accident), the system calculates 3,000 euros (3/12). Since 1,000 was already posted in the year, the system now only posts the difference of 2,000.

    End of the example.
  • Run at year-end closing:

    For this type of run, you enter the calendar year of the year-end closing. The key date of the calculation is the last day of the year. The calculation of the correction is essentially the same as for a mid-year run. However, there are differences in the treatment of trivial amounts.

For both types of run, the system executes the year-end closing run for the year prior to the calendar year of the correction period, in addition to the calculation for the entered year. This ensures that repeat runs for retroactive changes are performed correctly. You can display the results of these repeat calculations in a results log.

Activities

In the area menu for input tax correction (REITMENUTC), choose Start of the navigation path Input Tax Distribution and Correction Next navigation step Input Tax Correction. End of the navigation path

  1. Enter the correction object, the type of correction run, and other data for the postings you want to make.

  2. Run the program.

    A list of the created or simulated postings appears.

    There you can use the following functions:

    Button

    Quick Info Text

    Function

    Error Log

    Displays all messages related to the posting of the documents

    Documents

    Display Document

    Displays the documents that were posted by the correction run

    Display Previous Corrections

    Displays the correction runs of the previous months

You can reverse the posted corrections. From the area menu, choose Reverse Input Tax Correction .