The main difference between the two tax settings is in what data we export to Xero and what Xero does with it.
- If you use 'Let Xero calculate tax', please make sure the figure in bold and the tax code are correct.
- If you use 'Send exact tax amount', please always make sure NET and TAX are correct.
Let Xero calculate tax
Default tax setting in Datamolino is 'Let Xero calculate tax'. With this setting, Datamolino exports only the number which is in bold (TOTAL or NET for line items). The rest is recalculated by Xero based on the tax code you select from a drop down list.
Before exporting all you need to do is review the numbers in bold and the tax code selected from the drop-down. The other numbers are ignored when exporting so there is no need to worry if we didn’t capture tax values.
Exporting 'Invoice Total'
- In this case, Datamolino exports TOTAL and Xero recalculates NET and TAX based on the tax setting selected from the dropdown.
- Your amounts are then shown in Xero drafts as "tax inclusive". Once you approve the draft and it is in "Awaiting Payment", Xero automatically shows all amounts as "tax exclusive".
Exporting 'Line items'
- Most invoices list line items as NET values. Some lines do not contain tax rates as a percentage so Datamolino cannot calculate the TOTAL.
- In these cases Datamolino sends the NET value of the line item to Xero as “tax exclusive”. The rest is recalculated by Xero after exporting.
Send Exact Tax Amount
There are some instances when ‘Let Xero calculate’ might not work, so we have introduced ‘Send exact tax amount’.
An example use case for this setting is when a supplier rounds numbers differently than Xero, which may lead to small differences. If numbers calculated by Xero don't match numbers sent by Datamolino, Xero makes the tax adjustment.