Hi,
I’m using the application for a non-profit organization and here (Quebec, Canada), such organization can claim a refund of the taxes paid (checking only the purchases invoices) during the year. We have 2 taxes to take account of: one for the province (QC) and one for the country (CA). So I created 3 tax codes: one for each and one when both are applicable. Doing so provide me a negative “Tax Payable” amount in the Liabilities section of the Balance Sheet.
Now I want to complete the reclamation for my organization to both governments, but I wonder where do I should manage that within the tool?
So the day I’ll receive the refund, it will change the amount of the liabilities.
I already create a “Tax refund” account [Chart of accounts] (so I’ll be able to assigned the received amount to that), but I can not find how I can link it to the tax payable section.
the question can be ask for the other side… what to do when we have to pay taxes and
PS: I am not a professional accountant, just a volunteer with basic knowledge of accounting. So I may miss understand a concept here. But I learn fast if someone explains it to me
Yes… That is all what I did (As explain in my text).
Where I was not sure about is how to enter a transaction once the taxes has been paid (or in my case reclaimed), so in the “Balance Sheet”, the “Tax payable” become zero.
Which kind of transaction is required to do so? Is there any one or I am wrong with that concept.
Thanks.
I made a test by creating a new receipt transaction. But don’t know where to “post it” to the tax payable accounts.
Within the receipt, on the transaction line, I select the “Account Payable” but the provided drop down listed only my Suppliers.
And I don’t have the “Tax Payable” option within it.
I tried to create a Journal Entry but same issue…
What I am missing?
You should not use the default Tax payable account. You need to create a Tax payable account in the Chart of accounts. Then edit your Tax codes to use the account that you created.
Once that is done you will be able to use the Tax payable account that you created in a receipt.
Thanks a lot. After several tests, I was finally able to do what I wanted.
And in my case, I had to create 2 accounts (one for each government levels: province vs country)
Huge thanks.
When your non-profit in Quebec pays taxes, you’re eligible for refunds from both the provincial (QC) and federal (CA) governments. The negative “Tax Payable” balance on your balance sheet just means the government owes you money. To handle this in your accounting tool, you should record the refund claim as money that’s expected back by creating a receivable for each tax. This clears the negative balance by moving the amount from “Tax Payable” to a “Tax Refund Receivable” account. Once the refund comes in, record it as income to your bank account and clear the receivable. This keeps your records accurate and reflects the refund properly in your accounts.
