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How do I record partially recoverable sales tax on expenses?

Created on  | Last modified on 

Summary

How to set up and record expenses with partially recoverable sales tax in Sage Accounting.

Description

In Canada, some expenses include sales tax that is only partially recoverable. Business owners can claim only part of the tax paid as Input Tax Credits (ITCs).

EXAMPLE: Sales tax on meals and entertainment is usually 50% recoverable 

Resolution

  1. Click Settings.
  2. Click Chart of Accounts. Select an expense account.
  3. Check the Transactions posted to this account have part recoverable taxes checkbox.
  4. Verify the recoverable percentage and adjust if needed.
  5. Select a Non-recoverable Tax Ledger Account for the non-reclaimable tax portion.
  6. Click Save.

 NOTE: The default percentage for all part-recoverable accounts is located under Settings, Business settings, Sales taxes. 

Transactions posted to this account automatically apply part recoverable rules. Sage Accounting posts the reclaimable percentage to the ITC account and the non-reclaimable percentage to the Non-recoverable Tax Ledger Account.