Sales tax on partial purchase only

#1

This question might have already been answered, but I can’t find it while searching. How do I adjust sales tax when it is only charged to me on a part of the purchase. For example, GST in Canada is 5%. When I get my utility bill, let’s say the total bill is for $100. One would expect a $5 sales tax under normal circumstances, for a total payable of $105. But some of the services provided are tax exempt. so that sales tax charged might only be $3, for example, for a total payable of $103. This also happens when I buy food, meals, etc.

I can’t, as yet, find any way to adjust the sales tax amount, as I could in QuickBooks - there is only the automatic calculation based on the 5% GST. I can’t have different codes for every eventuality - there’s far too many variables.

Is there any way to have a variable sales tax code in the system, where I manually enter the dollar value of the sales tax? Or is there some way to record when I pay the bill. For example, in my above example, record a payment of $103, and then somehow account for the $2 I didn’t actually pay?

As noted, sorry if this is already covered somewhere, but I haven’t found search terms that show me an answer as yet :frowning:

#2

You enter the transaction over two lines. The first line contains the tax related amounts and the second line contains the non-tax related amounts - so based on your 100 + 3.

Line one is 60 + tax (3)
Line two is 40

#3

@KPC, also remember the discussion we had in this topic: How link sales tax accounts to appropriate liability accounts. If the tax is not going to offset or be offset, you can just enter the total amount and forget about tax codes entirely.

#4

the problem is, it is not always possible to tell from the receipt, especially if it’s a till receipt, which portions of which items are non taxable. I think I’m just going to have to do an adjusting entry in the Journal each time.

#5

can’t do that as some portions of the purchase are taxable.

#6

Journal entries to adjust sales taxes are not a good idea. I have personally never seen an invoice or a till receipt that did not indicate, in some way, which items were being taxed. In the USA, for example, it is common that medications or clothing for children under a set age, or food items are exempted under various state tax laws. Even a grocery store receipt will have symbols to indicate exempt items. Tax authorities everywhere demand the ability to audit not only your records but the merchant’s or supplier’s.