Setting up partially recoverable taxes

Summary

How to set a default ITC/ITR percentage in Sage Accounting.

Description

If your business registers for GST/HST or QST, you can recover part of the taxes paid on certain expenses. GST/HST uses Input Tax Credits (ITCs), and QST uses Input Tax Refunds (ITRs). Some expenses, such as meals and entertainment, allow only partial tax recovery.

Resolution

Set the default ITC or ITR percentage

  1. Go to Settings, Business settings, Sales taxes.
  2. Under Default Part Recoverable ITC/ITR(%), set a default percentage and adjust the recoverable amounts per transaction.
  3. Click Save to save your changes and to return to the Settings page.

Configure ledger accounts for partially recoverable taxes

  1. Go to Settings, Business settings, Chart of accounts.
  2. Select an existing ledger account or click New Ledger Account.
  3. Choose a Direct Expense or Expense ledger account type.
  4. Enable Transactions posted to this ledger account have part recoverable taxes.
  5. Review or update the displayed recovery percentage.
  6. Select a ledger account in Non-recoverable tax ledger account.
  7. Click OK, then click Save.

TIP:

For new businesses, Accounting adds ledger account 9200 – GST/HST/QST Unreclaimable Tax Expenses by default.
Existing businesses can create a new ledger account for non-recoverable taxes.

Transaction behaviour

When you select a part-recoverable ledger account on a transaction, Accounting flags the line as partially recoverable.
The transaction total remains unchanged, but Accounting adjusts the recoverable tax amount for tax reporting.
The transaction shows the total recoverable tax amount.

Solution Properties

Solution ID
240304191307777
Last Modified Date
Mon Mar 04 19:13:07 UTC 2024
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