Self-assess Provincial Sales Tax (PST)

In most provinces, provincial sales tax applies to the taxable goods and services you purchase or lease for use in your business, even when purchased or leased from out-of-province and out-of-Canada suppliers. If the seller does not collect the PST, you may need to self-assess and pay the PST due on the landing cost of the goods brought into the province. The landing cost includes one or more of the following: the basic cost of the goods, currency exchange on the goods, brokerage charges, transportation charges, the cost of labour and other costs related to acquiring the goods.

Purchasers typically rely on suppliers to collect the applicable provincial sales taxes. Some purchasers incorrectly believe out-of-province purchases are exempt from PST. The truth is, when purchasing from an out-of-province vendor who is not registered for PST in the province to which the goods are destined, it's your responsibility to self-assess and remit the tax. Goods purchased for resale purposes are typically exempt from PST at the time of purchase. However, where a company removes such goods from inventory for its own use, PST is applicable.

To enter purchases from out-of-province vendors where you must self-assess the PST, first create a Sales Tax code representing the self-assessed PST, then use this tax code on your purchases. Some customers also create a separate liability account for self-assessed provincial sales tax, but the account can be one of your current PST tax liability accounts. (See http://support.accountedge.com/kb/general-accountedge/header-and-detail-accounts for details.)

To create a sales tax code for self-assessed PST, use a Tax Type of Import Duty, and associate the code with the appropriate sales tax liability account:

  • Lists > Tax Codes
  • Click New
  • Type a code (up to five characters) for the new tax in the Tax Code field; press the Tab key
  • Enter a description and a tax rate
  • Select Import Duty Tax as the Tax Type
  • Indicate the linked account for the tax
  • Optionally link a card for the revenue authority
  • Click OK

You can now use this tax code on purchases. On the purchase itself, the tax code will appear, but no tax value will be displayed. The tax value will be recorded into the liability account you indicated, however. Additionally, the Sales Tax Summary and Details reports will display tax amounts associated with the tax code (in the Tax Paid column), for the given date range.