Adjust the tax amount on unpaid transactions

Adjust a transaction's tax amount when the amount needs to be higher or lower than that calculated automatically. Xero calculates tax on a line by line basis, so you may need to make an adjustment to match tax calculated on the transaction total.

What transactions can you make a tax adjustment on?

You can make a tax adjustment to these transactions:

  • Invoices and bills
  • Credit notes and prepayments
  • Spend and receive money transactions
  • Manual journals

You can adjust the tax amount on new transactions, and any existing transactions which do not have any payments or allocations applied.

Make a tax adjustment

  1. In your transaction, set Amounts are to Tax Exclusive.
  2. Click the Image of the plus icon. on the Tax Rate column to open up the Tax Amount column.

    Image showing the plus icon on the Tax Rate column.

    Opening up the Tax Amount column on one transaction shows the column on any subsequent Tax Exclusive transactions a user in your organisation creates.

  3. Enter your non-standard amount in the Tax Amount column. Xero adds a line above the transaction total to display the adjustment amount.

    Image showing tax adjustment amounts.

  4. Save the transaction.

Only the amount in the Tax Amount column displays on your PDF or online invoice or credit note. The amount you've adjusted sales tax by won't be shown.

How are tax adjustments included in sales tax reports?

On the Sales Tax Summary all sales tax totals include adjustments to tax you have made. They are not displayed separately.

In the Sales Tax Audit Report each adjusted sales tax amount appears in a separate 'Adjusted' section for the rate:

Tax showing on Audit Report with 'Adjusted' in tax rate name.