• From: Canada, BC, Grindrod
  • Registered: 02/08/2022
  • Posts: 32

Topic: Taxes

I wasn’t sure where to put this question. I hope this is ok.
I’m using the software in Canada for a charity. I have setup our GST tax collected 2074 (for the tax we collect) in an account under CURRENT LIABILITIES. I have the GST paid 5274(when making purchases of products) going into an account in EXPENSES.
I did it this way because of the way the system works in Canada. But I’m confused. At the end of the year, we might get a GST credit from the taxes paid into 5274 but it certainly won’t be enough to clear out the 2074 account or the 5274.  At the end of  the year I’m going to have 2074 remain with funds accruing into next year. What’s the best way to set all my taxes back to 0 at the end of the year if there are amounts left in there.
I hope I explained this clearly.
Thanks.

  • From: Canada, BC, Grindrod
  • Registered: 02/08/2022
  • Posts: 32

Re: Taxes

Hmm, thinking about this a bit more and you can probably tell how confused I am about how to do this. Maybe someone can just tell me how they do their sales taxes -  What COA categories and groups you use your collected and paid sales taxes.

Thanks.

3 Reply by rafat (edited by rafat 05/04/2022 12:10:16 pm)

  • rafat
  • Senior Member
  • Offline
  • From: UAE, Dubai
  • Registered: 11/28/2017
  • Posts: 550

Re: Taxes

This thread might help. Also refer to the wiki mentioned in the thread.

https://frontaccounting.com/punbb/viewtopic.php?id=9622

Taxes both Payable and Receivables should be on the same category of the COA mainly Liabilities. You sell you increase your tax liability, you purchase you decrease your tax  liability. IMHO it should never be an expense. Otherwise it will mess up other accounting reports.

Any accounting gurus around to pitch in please????

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4 Reply by baxterdmutt (edited by baxterdmutt 05/06/2022 03:30:39 am)

  • From: Canada, BC, Grindrod
  • Registered: 02/08/2022
  • Posts: 32

Re: Taxes

Ok that makes more sense. Now for another problem. My tax calculations were not the same as the governments assessment. What do I do with the difference. It’s likely never going to be used up.

I ran into another issue.
I pay a state tax that we never do anything with. I set it up so that the purchase orders calculate properly. The amounts get stored in the Cost of Goods area, But it shows in the tax reports. Do you have any suggestions.

5 Reply by rafat (edited by rafat 05/07/2022 10:20:08 am)

  • rafat
  • Senior Member
  • Offline
  • From: UAE, Dubai
  • Registered: 11/28/2017
  • Posts: 550

Re: Taxes

baxterdmutt wrote:

Ok that makes more sense. Now for another problem. My tax calculations were not the same as the governments assessment. What do I do with the difference. It’s likely never going to be used up.

If you are 100% sure of your figures and that you paid more Tax than what the Authority wants from u, then Claim it. Or keep the difference in accrued tax account and pay next Tax periods from it until its fully consumed. That is if the Accrued Tax Account Balance shows a debit.

baxterdmutt wrote:

I ran into another issue.
I pay a state tax that we never do anything with.

Sorry did not understand the statement.

But since you are quoting Canadian System this is what the wiki say:

Hope this helps.
Using Tax on already added Tax (Some Canadian Regions use this)
Certain regions in Canada have a Federal Tax of 5% and a Provincial tax of 7.5% on already taxed items. Here is how you can handle that.

First create 2 Tax Types:
Federal Tax 5%, rate 5. Remember to include the 5% in the name.
Provincial Tax 7.5%, rate 7.875. (7.5 * 1.05). Remember to include the 7.5% in the name. You may need to increase the percent decimals in preferences. The value 1.05 is the value of Federal Tax + 1. If the Federal Tax was 6% this value would be 1.06.
Combine these two Tax Types into a Tax Group.
Find the variable, $suppress_tax_rates, in config.php about line 193. Change the value to 1. This will suppress the internal tax rate when printing.
That's it.

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