Harmonized Sales Tax

Canada Sales Tax / Harmonized Sales Tax (AccountEdge)

Accounts

Canadian AccountEdge company files usually have four sales tax liability accounts: two for GST, two for PST. The two GST accounts are sales tax paid and sales tax collected. The two PST accounts are also sales tax paid and sales tax collected.

With the use of sales tax reports (Tax Detail or GST and PST returns), an AccountEdge user can determine sales tax liability, and remit to the authorities. The sales tax paid needs to be deducted from the sales tax collected, and the difference is remitted to the authorities. See Settling Canadian Sales Tax for details.

Implementing HST (Harmonized Sales Tax)

New Brunswick, Nova Scotia, Newfoundland and Labrador, Ontario and Prince Edward Island have combined their respective provincial sales taxes with the GST to create a harmonized sales tax (HST) in each of these provinces.

The HST rate in New Brunswick, Newfoundland and Labrador and Ontario is 13%, composed of a 5% federal part (equal to the 5% GST) and an 8% provincial part.

The HST rate in Nova Scotia is 15%, composed of a 5% federal part (equal to the 5% GST) and an 10% provincial part.

The HST rate in Prince Edward Island is 14%, composed of a 5% federal part (equal to the 5% GST) and an 9% provincial part.

(Origin: GST/HST - General information (http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/gnrl/menu-eng.html) Date modified: 2013-11-28)

To implement the HSTs in AccountEdge:

  1. Create Sales Tax Codes (Lists > Tax Codes > New) for each of the participating provinces, at the tax-rate granularity

  2. Three HST tax codes would be required: a 13% HST, a 14% HST and a 15% HST

  3. Tax Codes are 5-letter-number combinations, therefore create the 3 codes as HST13, HST14 and HST15, representing 13%, 14% and 15%, respectively
  4. Assign these codes in the Selling Details of the customer cards in your card file, based on the "HST place of supply rules."
  5. If HST is not applicable for a particular customer, the GST (and possibly PST) would apply.

The tax Type for HST is Goods and Services Tax

When you create these new tax codes, you can assign the GST collected and GST paid accounts to the codes. Alternatively, you can create new accounts: one for HST collected and one for HST paid, and assign these to the new tax codes.

When you run your Sales Tax reports, the taxes collected and paid for each of the tax codes will be listed.