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1660075

Tax code GST and PST in Canada

Posted By

Hi there,

Our client is in Canada. There are two types of input taxes: GST (5%), PST (7%)

In general, GST is 100% recoverable (deductible) while PST is not recoverable.

As an example, I have an invoice for $112, (100 net + 5 gst + 7 gst)

The accounting entry should be as follow

DR [Expense] $100

DR [GST] $5

DR [PST] $7

CR [AP] $112

The issue is that because PST is not recoverable, the account used should be the same as the expense account used in the transaction; that is, the PST is dynamic based on the expense account used. Is this functionality available out of the box or is this something we have to customize?

Thank you for your attention.

  • 0

    This is a common problem I have also come across and the solution does requires customization.  What I have seen as a work around is to add a second line, code it to the same expense g/l account as the first line, without the second line being subject to tax. The entry would look like this:

    Dr. Expense 100 (subject to GST)

    Dr. Expense     7 (not subject to sales tax)

    Dr. GST           5 

    Cr. AP          112

  • 0 in reply to ChristopherG

    Thanks Christopher.

    I can use the workaround in supplier BP invoice but for purchasing I am not sure if it will work because it involves using products/quantity. Based on your experience, what kind of customization is required to achieve this in purchasing?

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