I haven't been claiming and ITC for business meals and travel expenses but I recently learned that I can claim 50% of the HST as and ITC. How do I set this up in Sage to indicate that 13% tax was paid but only 50% of that tax is claimable as and ITC?
See the image below. This setup has to be done by sysadmin in single-user mode (or someone with Full Accounting Rights).
First create a new Tax (eg. HSTNT = HST Non-Taxable) in Image 1. You can choose to Report on Taxes or not (I chose not in the image).
Then at the left, select Tax Codes (red arrow in Image 2).
Create a code like highlighted MH and double-click it to get the Tax Code Details dialog (inset image in Image 2). Current versions of the program can use more than two characters for the tax code.
Set it up as indicated. Note: This set up is to record the entry as HST included.
Enter $113 on the purchase invoice line item and use the tax code created. This will calculate $13 in tax and send $6.50 to the tax paid on purchases account and $106.50 to the Meals expense account.
You can set it up with Included in Price as No if you wish. Of course, don't use this on the Tip line.
Final Note: All entries you have posted in the past cannot be edited and this new tax code used instead. The program tracks which tax codes existed at the time of the original entry and will only give you those options when editing. Your easiest method of claiming the HST on past entries is using a General Journal entry to transfer the money from where you posted it originally (Meals Expense) to the HST Paid Liability account.
