Using QuickBooks in Canada

This section discusses how to use QuickBooks to track and report your GST (or HST), PST, and QST.

For detailed information on payment of GST and Provincial taxes, please consult your local Canada Revenue Agency (CRA), the Ministère du Revenu du Québec, or other Provincial agency.

Getting started

  1. Add an account for GST Payable using the account type Other Liability.
  2. Add a new vendor for your PST tax agency.
  3. Add three new items:

If you use QST, create a new item similar to GST. Choose Lists > Items, and then choose New from the Action pop-up menu ( image). The QST item type should be “Other Charge” and the account type should be “Other Current Liability.”

When you're done, your Item list should look something like this:

Name Description Type Account Price
GST GST 123 Other Charge GST Payable 7%*
QST Quebec Sales Tax Other Charge QST Payable 8%*
Subtotal   Subtotal    
PST Provincial Sales Tax Sales Tax Item Sales Tax Payable 6.5%*

* These tax rates are only examples. Check with your tax agency for the latest rates.

If you use HST instead of GST, edit the GST item to reflect an HST item name, description, payable account name, and tax rate.

Adding GST to an invoice

To add GST to an invoice:

  1. In the invoice detail area, enter all the items for this invoice that are subject to GST.
  2. Enter your subtotal item.
  3. Enter your GST item after the subtotal.

    Your GST item should be non-taxable (a “T” should NOT appear in the Tax column). QuickBooks calculates and displays the amount of GST owed on this invoice.

  4. Add any items not subject to GST (zero-rated or exempt) below the GST item.

Adding GST and PST to an invoice

To add GST and PST to an invoice (where GST is not subject to PST):

  1. In the invoice detail area, enter all the items for this invoice that are subject to GST.
  2. Enter your subtotal item.
  3. Enter your GST item after the subtotal.

    Your GST item should be non-taxable (a “T” should NOT appear in the Tax column). QuickBooks calculates and displays the amount of GST owed on this invoice.

  4. Add any items not subject to GST (zero-rated or exempt) below the GST item.
  5. In the Tax field, select the appropriate PST tax item from the list.

To add GST and piggybacked PST to an invoice (where GST is subject to PST):

  1. In the invoice detail area, enter all the items for this invoice that are subject to GST.
  2. Enter your subtotal item.
  3. Enter your GST item after the subtotal.

    Your GST item should show on your invoice as taxable (note the T in the Tax column). If it doesn't show as taxable, click the Tax column. Later, you'll want to edit your GST item to indicate that it's taxable.

    QuickBooks calculates and displays the amount of GST owed on this invoice.

  4. Add any items not subject to GST (zero-rated or exempt) below the GST item.
  5. In the Tax field, select the appropriate PST tax item from the list.

Adding GST and QST to an invoice

If you are a Quebec resident or non-resident conducting business in Quebec, you will need to collect both GST and QST.

To add GST and QST for an invoice in Quebec:

  1. In the invoice detail area, enter all the taxable items.
  2. Enter your subtotal item.
  3. Enter your GST item after the subtotal.

    Your GST item should show on your invoice as taxable (note the T in the Tax column). If it doesn't show as taxable, click the Tax column. Later, you'll want to edit your GST item to indicate that it's taxable.

    QuickBooks calculates and displays the amount of GST owed on this invoice.

  4. Enter your subtotal item.
  5. Enter your QST item.
  6. Enter any items not subject to GST or QST.

Tracking GST on bills you receive

When you receive a bill that includes GST, enter information about the amount of GST on the bill in the detail area.

To track GST on bills:

  1. In the Enter Bills detail area, in the Account column (this will be on your Expenses tab if you have the inventory feature active), choose your GST Payable account (or your Sales Tax Payable account if your GST is tracked with a sales tax item).
  2. Enter the amount of the GST shown on the bill.
  3. Enter your items and other expenses.

Making adjustments to your GST Payable account

From time to time, you may need to make adjustments to your GST Payable account, either increasing or decreasing the amount you must remit.

These adjustments include writing off the GST amount (7/107) of a bad debt. For example:

Taxable items on invoice $200.00
GST due $14.00
Total $214.00
GST reported in the 4/1/03 - 6/30/03 reporting period
No payment received on invoice in 2003
Write off bad debt in 2004  
Claim a tax adjustment of 7/107 x $214 = $14

To make adjustments to your GST Payable account:

  1. Choose Lists > Chart of Accounts.
  2. Double-click your GST Payable account.
  3. Enter the GST amount in the Increase column for GST that is payable or in the Decrease column for GST that is considered input tax credit. For bad debts, the value of the tax adjustment is 7/107 of the write-off amount.
  4. In the Account field, choose the appropriate account, like Bad Debt. If you don't have a Bad Debt account, you can add one as you go. Choose Expense or Other Expense for its account type.
  5. Enter any memo. A memo could include the number of the bad debt invoice.

Understanding your GST reports

QuickBooks provides three standard GST reports: GST Collected, GST Paid, and Sales and Other Revenue.

Your reporting preferences must be set to Accrual.

To check/change your reporting preferences:

  1. Choose QuickBooks > Preferences and click Reporting.
  2. On the General pane, select Accrual.

GST Collected report

This report includes all your increases to your GST Payable account; the GST you charged on invoices, credit memos, cash sales, and any adjustments for the specified date range. The total for the reporting period is the total GST collected or collectible.

Important: The Canada Revenue Agency (CRA) considers invoices due on the date you issue them (accrual-based accounting). So in any given reporting period, unpaid invoices with GST must be calculated in the GST “collected and collectible” for that period.

The amount from this report is used to fill in field 105 (Total GST and Adjustments for Period) on your Goods and Services Tax Return.

GST Paid report

This report lists all the decreases to your GST Payable account from the tax you paid to vendors and others, as well as any adjustments like the GST included in a bad debt. The total is your input tax credit for the reporting period.

The amount from this report is used to fill in field 108 (Total ITC's and Adjustments) on your Goods and Services Tax Return.

Sales and Other Revenue report

This report calculates your total sales and other revenue without PST and GST amounts collected/collectible.

The amount from this report is used to fill in field 101 (Sales and Other Revenue) on your Goods and Services Tax Return.

Preparing your Goods and Services Tax Return

You must file a GST return for each reporting period, even if you do not owe money nor expect a refund. For reporting periods with no business transactions, file a nil return.

To run your GST-related reports:

If you owe GST

To complete your form, include payment by writing a check in the Write Checks window (to Receiver General) for the net amount of the GST you owe. Please write your GST number on the check.

Preparing for payment of PST

As you write invoices, you can view the sales tax liability you are accruing in the Pay PST Liability report and the PST Payable register.

Pay PST Liability report

QuickBooks' preset Pay PST Liability report shows how much you owe each tax agency.

To view the sales tax report:

Choose Reports > Vendors & Payables > Pay PST Liability Report.

The Pay PST Liability Report shows your total taxable sales, total non-taxable sales, and the amount of sales tax you owe each tax agency as of the date you specified.

PST Payable register

Each time you enter a sale that includes sales tax, QuickBooks enters the tax information in your PST Payable register.

Note: QuickBooks keeps track of transactions for all tax vendors in the same PST Payable account.

To display the PST Payable register:

  1. Choose Lists > Chart of Accounts.
  2. Double-click your PST Payable account.

To see a list of all transactions involving a particular tax agency:

  1. Select a transaction involving a specific agency.
  2. Choose Reports > QuickReport.

Paying PST

Use the Pay Sales Tax window to see how much tax you owe and to have QuickBooks write a check to your tax agency or agencies. QuickBooks updates your sales tax account with the payment information. QuickBooks calculates the tax you owe on either a cash basis or an accrual basis.

To pay off your sales tax liability:

  1. Choose Vendors > Pay PST.
  2. Choose the account from which you want to pay your sales tax agency or agencies.
  3. Change the date in the “Show sales tax due through” field if necessary. QuickBooks uses the date at the end of the last sales tax period. You can change the date QuickBooks uses by indicating whether you pay monthly, quarterly, or annually in Sales Tax Preferences (choose QuickBooks > Preferences and click Sales Tax).
  4. Select the tax agencies you want to pay in the Pay column. Edit the amount you want to pay if necessary. If you make a mistake, click Clear Payments. The button name changes to Pay All Tax. Click Pay All Tax to mark all of the taxes as ones you want to pay.
  5. Click OK. QuickBooks writes and records checks to the tax agencies you indicated. All you need to do is print the checks.

QuickBooks also updates your sales tax report and PST Payable register to show that you've paid the tax agencies.