How to: Process Month End Taxes for Canadian Clients

From Accounting

Go to File, Month End, Tax Reports, Print Tax Due

This report reflects the amount of tax due on sales.

From Accounting

Go to File, Accounts Payable, AP Reports, AP Entered by Account Code

Print this report only for the Input Tax Credit account code and only for the time period to figure the tax liability. This report will show how much GST already paid.

Compare the two reports. The difference between the two figures is the amount overpaid or underpaid.

GST Underpaid

1. Create an accounts payable record for the difference of GST underpaid.
2. In the accounts payable distribution, create an entry for the total amount of the reconciled month end tax report and charge to GST account, typically a contra-revenue account.
3. In the accounts payable distribution, create an entry for the total amount of the Input Tax Credits and charge to the Input Tax Credit account.

GST Overpaid

Make a journal entry as follows:

1. Debit GST account (typically a contra-revenue account) for the entire amount of the reconciled month end tax report.
2. Credit the Input Tax Credit account with the entire amount of the reconciled month end tax report.

Note: In this scenario, it is important to notate this carryforward to be used in subsequent months.

Tax Reporting Period
Enter the date range corresponding with the End of Month Tax Reports for reconciliation.

Account Code
Select the account code for Input Tax Credit.