Canadian Taxes

GST and HST for Canada transactions

For agencies doing business in Canada, the tax rate to charge depends on the place of supply. 

Throughout Canada, non-taxable supplies have a zero-rated (0%) GST/HST rate. The tax rate for other taxable supplies and services depends on the province or territory. 

Local tax set up 

Accountability's native tax management function gives agencies a central place to set up required Input and Output tax codes for Canada.  These tax codes are applied to relevant transactions to calculate the tax rate on purchases and sales. 

1. Navigate to Setup Files>Tax Codes.  
2. Click NEW TAX CODE to add a tax code and rate.
3. Populate the Tax Code form as follows
   1. Enter the Tax Code and Description. For each corresponding Tax Code, enter the default rate in the Tax % field. This rate can be overridden at the master data level or on specific transactions. 
   2. To make this tax code visible only to users managing transactions for Canada, set the Restrict to Country field to Canada.  The Accountability Office record needs to have the Country of Domicile set to Canada.
   3. If you are using this tax code on client transactions, makes sure that Use for Output? is checked. To use on supplier transactions, check Use for Input?
   4. You can optionally assign a specific Output Tax GL Account and/or an Input Tax GL Account for a specific Tax Code if it's different from the Office default. 
      If the Office default is blank, the system will post the tax amounts to the default tax accounts at the agency level. 
   5. You can optionally define how you want this tax code to appear on reports:
      
      

Tax defaults and transaction-level overrides

Once your local tax rate cards have been created , you can then assign the default tax rate  by adding the Tax Code to the following master files:

1. Office record
2. Client record :  Only Tax codes designated Use for Output? will appear on the list. 
   
   1. Estimates will automatically inherit the default output Tax Code and Tax % for this client.  This can be overridden at the Estimate level by going to General Settings .  At the Estimate line item level, you can override whether a specific line is exempt from the tax, i.e. non-taxable 
   2. Client job invoices based on estimate will use the tax rate on the Estimate.  Freeform invoices default to the Client's tax code/rate, but can be overridden at the point of request. 
3. Supplier record:  Only Tax codes designated Use for Input? will appear on the list. 
   
   1. Purchase orders will automatically inherit the default input Tax Code and Tax % for this supplier.  The Tax Code or Tax Rate can be overridden at the line item level. 

Supplier invoices line amounts can be entered inclusive or exclusive of tax. Based on your agency database setting, the  Enter Amount Including Tax option is enabled (or disabled) by default.  

 

Tax reporting

The Tax Accrual Basis Report provides a summary or detailed view of all transactions grouped by Tax Code for each type of tax (Input or Output). 

To run the report, navigate to Accounting>General Ledger>General Ledger Reports and scroll down to the Tax Reports section.  Follow the steps in the article below:

• Tax Report - Accrual Basis