Topic: Different taxes per province in Canada

Hi,

Canada has a somehow complex sales tax system, the types of taxes and the rates within the same tax types differ, as shown here: http://somanews.wordpress.com/2010/07/28/provincial-and-federal-sales-tax-rates-per-canadian-province/

Let´s concentrate on HST (Ironically called "Harmonised Sales Tax", although it´s far from  being harmonized). HST rates differ from province to province, however, all HST is paid to the federal government (not the provincial government. Therefore, we will need to set up different taxes like for example:

HST British Columbia: 12%
HST Ontario: 13 %
HST Nova Scotia: 15 %
etc.

Since all of them are paid to federal government, it would make sense to post them all to the same GL account. However, when trying to do so, I get this ("error") message:

**********
To avoid problems with manual journal entry all tax types should have unique Sales/Purchasing GL accounts.
**********

Altough it reads "... SHOULD have...", there´s no way to post to tax types to the same account.

Then I tried to create sub-accounts using the "account code 2" like this

HST British Columbia: 2151-00
HST Ontario:             2151-01

I was hoping this would create sub-accounts, but instead, I get the error message that account exists already, so it does not take into consideration account type 2 (the part after the dash).

As if this would not be complicated enough, for the province of Quebec, there are two sales taxes to be charged (GST and PST), while GST goes to federal government (same account as HST), and PST goes to provincial government. PST is charged on net prices plus GST, thus it´s "tax on tax".


Could somebody please guide me on how to set up this somehow complex situation in the GL?

Thanks a lot!!

MacPhotoBiker
--
Just do your Core Business, we do the rest: Computer Maintenance  |  Data Recovery  |  Hosting  |  Accounting
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Re: Different taxes per province in Canada

Please look into the wiki about how to solve tax issues.

Joe

Re: Different taxes per province in Canada

Hi Joe,

thanks for the "push" in the right direction, I did not mean to appear lazy.

If somebody else bumps into this conversation, here the link to the wiki Joe was mentioning:

https://frontaccounting.com/fawiki/index.php?n=Main.TaxSystem

Thanks

MacPhotoBiker
--
Just do your Core Business, we do the rest: Computer Maintenance  |  Data Recovery  |  Hosting  |  Accounting
www.justcorebusiness.com

4 (edited by MacPhotoBiker 09/28/2012 08:53:10 pm)

Re: Different taxes per province in Canada

Hi Joe,

sorry, it did not quite answer my question actually. See this part from the wiki:

Taxes:
VAT 19%
VAT 5%

They are both VAT, but different percentages. What do I need to do in order to have them both posted to the same GL account?

After all, all HST (sales and purchases) should go to the very same HST GL account (debit and credit). Then, the balance between debit and credit is what needs to be paid to government.

Thanks!

MacPhotoBiker

MacPhotoBiker
--
Just do your Core Business, we do the rest: Computer Maintenance  |  Data Recovery  |  Hosting  |  Accounting
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Re: Different taxes per province in Canada

You should create subaccounts for every tax rate. In FA subaccounts are just GL accounts grouped under the common account group. This requirement can looks weird, but this is really needed in current FA internal design.
Janusz

Re: Different taxes per province in Canada

Hi Janusz,

thanks a lot for your reply, I do appreciate.
I don´t mind a "workaround", as long as I get it somehow running.

Am I on the right track here: http://screencast.com/t/IgULkqz84h

Thanks again!

MacPhotoBiker

MacPhotoBiker
--
Just do your Core Business, we do the rest: Computer Maintenance  |  Data Recovery  |  Hosting  |  Accounting
www.justcorebusiness.com

Re: Different taxes per province in Canada

Yes, I think so. In fact often single account is used for all sales tax posting, but using more than one account for this purpose is not uncommon and depends on local accounting habits.
Janusz

Re: Different taxes per province in Canada

Hi Janusz,

thank you very much again. It´s interesting that you say "often single acount is used...", since this was my initial question, but it does not seem to be possible in FA, or at least I did not figure out how to do it. Anyway, I set up most of the tax accounts per province already (as sub-accounts), so unless my accountant gets angry on me, I believe this should work.

Thanks again for guiding me, I really appreciate.

MacPhotoBiker

MacPhotoBiker
--
Just do your Core Business, we do the rest: Computer Maintenance  |  Data Recovery  |  Hosting  |  Accounting
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Re: Different taxes per province in Canada

You are welcome. I cannot guarantee your accountant will be fully satisfied (people doing this business are mostly very conservative), but I'm pretty sure that per tax rate GL subaccounts are at least acceptable.
Janusz

Re: Different taxes per province in Canada

Thank you Janusz, much appreciated.

MacPhotoBiker
--
Just do your Core Business, we do the rest: Computer Maintenance  |  Data Recovery  |  Hosting  |  Accounting
www.justcorebusiness.com

Re: Different taxes per province in Canada

hi, I just started using FA and am new to the forum. I was having a similar issue with different HST rates as well. reading through this post helped me solve the issue by creating sub accounts for each. Just wanted to say a thanks for the info.

Looking forward to contributing to the forums here.

Re: Different taxes per province in Canada

CharlesHuck,
welcome to the forum. Good to know that the topic was helpful to others, too.

All the best with FA.

MacPhotoBiker
--
Just do your Core Business, we do the rest: Computer Maintenance  |  Data Recovery  |  Hosting  |  Accounting
www.justcorebusiness.com