When creating a sales transaction in Sage Accounting (invoice, credit note, quote, estimate, or a quick entry), the available tax rates are based on the address (or delivery address, if different) of the contact. For example, if you create a sales invoice for a customer in the Yukon territory, a GST field with GST rates will be available on each invoice line.
When creating an expense transaction, the available tax rates are based on your business address. This is because your business paid the taxes on purchase. In some situations, you may need to use the rates applicable to the vendor’s location. To do this, you can select the correct tax area in the Tax rate for field above the document. This option is also available for Other Receipts and Other Payments.
Accounting keeps track of the taxes charged on sales, and recorded on expenses. You must report this information at the end of a month, quarter, or year, depending on your reporting period. You pay the government if the tax charged on sales is more than the tax you've paid, or receive a refund when the amount you paid is greater than the taxes you collect from sales.
If your company is GST/HST registered, you must charge and collect these taxes from your customers. Also, if registered with provincial tax authorities, you must charge and collect those taxes. If you haven't provided your tax registration number and indicated a remittance frequency, you can do that in the sales tax settings. Sales tax returns can also be exported in CSV or PDF format.
Yes! Sage Accounting keeps track of your province's tax laws to accurately calculate sales tax and returns. If you charge sales tax outside of your province, you can also add other tax agencies you pay.
There are a few types of sales taxes that you may charge your customers and need to include in transactions:
Goods and Services Tax (GST). GST is the federal tax collected on Canadian goods and services, and comprises a portion of HST for those provinces who collect that instead. It is applicable to New Brunswick, Ontario, Prince Edward Island, and Newfoundland and Labrador.
Provincial Sales Tax (PST). This tax is collected only in Manitoba (where it is referred to as Retail Sales Tax, RST), British Columbia, and Saskatchewan.
Harmonized Sales Taxes (HST). Is a combination of GST and PST, jointly calculated before remittance to the Canada Revenue Agency (CRA). HST is applicable to New Brunswick, Ontario, Prince Edward Island, and Newfoundland and Labrador. These provinces chose to combine their sales tax collection PST with the federal GST.
Québec Sales Tax (QST). In Québec, QST is levied by Revenu Québec on most goods and services. QST replaces the HST or PST in other provinces and is applicable only to Québec province.
Note: Alberta province, Nunavut and Yukon territories, and the Northwest Territories collect only GST.
If you are a GST/HST/QST registered business, you can claim some of the taxes paid on expenses on your tax returns. For GST/HST, these entries are called Input Tax Credits (ITCs) and the QST they are called Input Tax Refunds (ITRs). For additional information about ITCs and ITRs, see the Government of Canada website.
Some expenses like meals and entertainment have partially recoverable Input Tax Credits (ITCs) or Input Tax Refunds (ITRs). Follow the steps below to set up Accounting to allow you to account for these types of expenses.
If your business is GST/HST or QST registered, you may submit tax payments to the CRA or Revenu Québec in instalments. You can set Accounting to keep track of your instalment payment totals in the relevant boxes on your tax return.
Before setting this up, consider to which ledger accounts you want to post the payments. If you don’t already have ledger accounts for instalment payments, you’ll need to create them. You can do this from the Chart of Accounts page beforehand, or when you turn on the feature. There is no difference, except that creating them from the Chart of Accounts page allows you to review the chart first for numbering. If you make payments to both the CRA and Revenu Québec, be sure to create two accounts, one for each type of tax.