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How to set up sales taxes

Created on  | Last modified on 

Summary

How to set up sales taxes in Sage Accounting.

Description

  • Select the taxes that are applicable to your business
  • Enter your tax registration numbers
  • Enable tax rate selections in transactions
  • Manage tax rates
  • Set up for tax installment payments or ITCs/ITRs

Resolution

Go to Settings, Business settings, Sales taxes.

▼Tax names

GST is a federal tax on Canadian goods and services and is part of Harmonized Sales Tax (HST) in applicable provinces. It applies in New Brunswick, Ontario, Prince Edward Island, and Newfoundland and Labrador.

Provincial Sales Tax (PST)

PST applies in British Columbia, Saskatchewan, and Manitoba as RST.

Harmonized Sales Tax (HST)

HST combines GST and PST before remittance to the Canada Revenue Agency (CRA). It applies in New Brunswick, Ontario, Prince Edward Island, and Newfoundland and Labrador.

Québec Sales Tax (QST)

QST applies in Québec and replaces HST or PST in other provinces. Revenu Québec administers QST.

NOTE:

Alberta, Nunavut and Yukon, and the Northwest Territories collect only GST.

Preparing for tax type setup

Businesses must comply with place-of-supply rules and eligibility requirements. If selling across Canada, ensure all necessary registrations are complete and tax numbers are available before setup. Registered tax types appear in selection lists for sales and expense transactions.

Setting up tax types

In the Sales Tax Settings list, select I will not collect tax here for unneccesary tax types. For required tax types, enter registration numbers and set the compliance reporting deadlines in the Tax Return Frequency field.

How Accounting records taxes in transactions

Sales transactions (invoices, credit notes, quotes, estimates, quick entries) apply tax rates based on the customer’s address.

  • For example, invoices for Yukon customers display GST rates

Expense transactions apply tax rates based on the business address, as you pay taxes on the purchase. Sometimes, vendor location tax rates can apply. Select the correct tax area in the Tax rate field when needed. This option is also available for Other Receipts and Other Payments.

Other tax settings