I live in BC Canada. We have two taxes here. GST (5%) and PST (7%).
Some items will require both taxes be charged, while some will require only one or the other.
Also, the GST is recoverable on anything I purchase for the business. Therefor it is recoverable from any GST I collect, until I break even and then the rest will go to the government.
The PST though, is simply collected and remitted.
How can I set this all up?
Any tips would be gladly appreciated. I did some searching and reading about dual taxes, but nothing I read seemed to cover all these angles.
Ill see if I can make that work out. Thanks for the examples.
Is it possible to create a separate “Tax payable” account on the account charter? I am thinking it might make sense to keep the two taxes in separate receiving accounts to simply things at year end? Not sure though, so new to this accounting stuff.
This would be an excellent goal. It is related to my long-standing desire for tax reports that segregate components of multi-component custom tax codes. With those, you would at least know how much to pay on each tax, even if they were aggregated into a single liability account. Maybe the idea of separate accounts points towards a solution. Maybe this is similar to custom subsidiary accounts?
Just create new account in your Chart of Accounts. Then you can select it when setting up tax code so the tax amounts are posted to that account rather than to default Tax payable.
In Canada the GST owing is comprised of the difference between what you collect minus what you pay in the GST. However the PST it is not always as straight forward. Some companies are given a special tax number which exempts them from PST on purchase of supplies. On other thing they purchase, like office supplies, you pay the PST which should then go into the purchase price (expensed). You don’t get this back. In this case, where you would like the taxes to be included in the purchase invoice, the PST portion should just go into the expense account with the rest of the purchase and the GST into the tax account. Is there a way to do this?
I understand your point, however I have 2 issues. The bill I’m having trouble with is from the phone company. Even if I sit down and try and figure out how they arrived at the tax it is complicated. Bell’s HQ is in Ontario and I’m in BC and there is something screwy with they way they calculate taxes owed on cell phones. Long story short it would be nice if I could just enter(physically type the amt in) the tax to be included and be done with it. Since the tax payable account is a special account there is no way to just edit the amount of tax.
Basically I’m trying to get something for free. I did figure out that I could just subtract the amt of the PST off the total in the first line of the purchase order (saves not having to use a calulator) then I add the PST on another line to the expense (correct) but it still doesn’t calculate the correct GST. That however is a remnant of the complex BS of the phone companies tax calculation, but it is close enough, for how they say…“gov’t work”
Thanks
Am I correct in saying that there is no way to directly enter the tax into the tax payable account thru the purchase invoice menu?
Not quite. Create a custom 100% tax code. Read about that here: https://www.manager.io/guides/8901. The tax posts to Tax payable, but shows as a separate line item. Experiment with that to see if it gives you what you want. You can also create a custom account for the posting, as mentioned in the Guide.
