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Quick Method of Accounting for HST

nawabnawab Member Posts: 3

Hi there,

I run a small service business in Ontario, Canada. While I charge 13% HST to my customers, I use CRA's Quick Method of Accounting for HST to calculate my HST return, instead of claiming any input tax. As a result, I only return 8.8% HST to CRA.

In Wave, the HST Payable is a system account and the HST payable value is calculated based on HST collected (invoiced) minus HST paid (input) both at 13%. As a workaround, I've created a vendor called "HST Return" and posting my sales tax payments as tax expenses. However, when I create reports, the HST payable system account is showing up as unpaid liability which is messing up the numbers.

How can I solve this issue? Any suggestion would be appreciated. Thanks in advance.

in Accounting Technical Support

Comments

  • AlexiaAlexia Member Posts: 3,314 ✭✭✭✭

    Hi, @nawab.

    To preface my suggestion, I'd like to say that when it comes to taxes, you are always better to talk to an accountant. We are happy to provide help with any management accounting tasks, but tax accounting is beyond the scope of what I can offer. Your question here exists somewhere in between the two, so I'll do my best to assist, but I do still recommend talking to your accountant.

    What you would have to do is make a journal entry transaction for the difference between the HST invoiced, and the HST you're actually going to pay. This journal entry would debit your HST liability account and credit Sales. This represents how your paying less tax represents more money in your pocket from each transaction.

    As for your actual tax payments, you would also account for those using journal entries. Here's how you would do it.

  • Rachel_MayRachel_May Member Posts: 2

    Could you kindly walk through, step by step, how to create a transaction entry to debit HST liability and credit sales?

  • mdscroggins99mdscroggins99 Member Posts: 2

    I have a question about import and auto merge. If "import new transaction" is turned on is this based on transactions that occur to the connected after the date of the last import? Does "auto merge" affect any records in the WAVE connected except the duplicates. Does it do a transaction import of new records as well?

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