Set the tax basis on a settlement
How to set the tax basis on a ClaimDS settlement — when to use the original invoice rate, the latest rate, or a manual one, and the best practice for each.
The tax basis on a settlement looks like a free three-way choice, but in practice it's mostly decided for you by what kind of note ClaimDS is issuing. This guide is about recognising which case you're in and picking correctly within it.
GST treatment has legal consequences and conditions. This page describes how ClaimDS behaves; confirm the right approach with your tax advisor. This is general guidance, not tax advice.
In what case to use each
- Original — any real GST (Section 34) credit note. The rate comes from the source invoice. This is the default and by far the most common.
- Latest — a commercial, zero-GST note, where you want the current statutory rate as a reference on a note that carries no GST.
- Manual — a commercial note where there's no single original to inherit from, or the sources disagree. You type the rate.
Best practice
- Default to original. It's the only basis valid for a real GST credit note, and it keeps the note aligned with the invoice the recipient is matching against.
- Don't reach for manual to dodge a data problem. If original won't resolve because a source invoice's tax is missing or malformed, fix the source transaction rather than papering over it with a typed rate.
- Let the situation drive it. You're usually on latest or manual because ClaimDS has already determined the note is commercial — not because you freely chose. Treat that as a signal to slow down.
- Treat the acknowledgement as a real sign-off. It's recorded, so make it a deliberate decision and check anything unusual with your advisor.
Do it
Work through the steps below. For the underlying idea, see choosing the GST rate on a credit note; for the separate claim-level setting, see how tax is worked out on a claim.
Step-by-step
Start from the kind of note
The basis follows the kind of credit note. A real Section 34 GST credit note must use the original invoice's rate, so ClaimDS locks it to original. Only a commercial, zero-GST note opens up the latest and manual options. Knowing which note you're issuing tells you which choices you even have.
Use original for a GST credit note
For a normal GST credit note, the basis is original — the rate is inherited from the source invoice so the note matches what was charged. This is the default and the right choice almost every time. ClaimDS applies it without any extra step.
Use latest only on a commercial note
When the settlement is a commercial zero-GST note — say a composition dealer, or a settlement after the Section 34 window has closed — the rate stops being a tax figure. Latest fills it with the current statutory rate as a reference value on a note that carries no GST anyway.
Use manual when there's nothing to inherit
Also on a commercial note, choose manual when there's no single original invoice to take a rate from — a settlement with no matched source invoice, mixed rates across several sources, a rate-less cess, or a credit-memo you're proposing to a vendor. You enter the rate yourself.
Acknowledge the warning and submit
Latest and manual each raise a legal-risk warning that you acknowledge before the run goes ahead, and ClaimDS records that you did. Original needs no acknowledgement. The basis is set once for the whole settlement run, not per line.
Frequently asked
Why won't ClaimDS let me use latest or manual on a GST credit note?
Because a Section 34 credit note must mirror the rate on the original invoice to be a valid tax adjustment. ClaimDS locks a GST credit note to original; latest and manual are only for commercial, zero-GST notes.
When would I actually use latest or manual?
Only when the note is commercial rather than a GST credit note — for example a composition dealer, or a settlement raised after the Section 34 window. There the rate isn't a tax figure, so a reference or typed rate is acceptable.
Is the basis set per line or per settlement?
Per settlement run. One basis applies to the whole run rather than line by line, so all the lines in a settlement share the same choice.
How is this different from the tax mode on a claim?
They're separate. The claim's tax mode decides how a claim works out its own tax; this basis decides the rate printed on the settlement's credit note. See how tax is worked out on a claim.
Still stuck?
Book a demo and we'll walk through it on your own data — or just talk to us.