Enter a GST/HST Refund in Cash-Basis Accounting

If, after following the period-end procedures, you find that the government owes you a refund:

1. If you have not already done so, add a customer record for the Receiver General.

Note: On the Taxes tab, ensure that the Tax Exempt column is selected for GST and PST (or QST, if you company is in Quebec).

2. Create a sales invoice with the Receiver General as the customer. How?  
   1. In the Home window, click Customers & Sales on the navigation pane.
   2. In the Tasks pane, right-click the Sales Invoices icon and select Create Invoice from the menu.
3. Select Pay Later in the Paid By box.
4. Enter an invoice number, such as GST Q1 for the first quarterly GST refund, and enter the date.
5. Enter the amounts and account numbers for all GST accounts, as follows:
6. In the Amount box, enter the corrected GST Paid amount from the GST report, as a positive number. In the Account box, enter the GST Paid On Purchases account number.
7. On the next line, enter the corrected GST Charged amount from the GST report, as a negative number, and the GST Charged On Sales account number.
8. Similarly, enter the account balances and account numbers listed on the Transactions By Account report for the remaining GST accounts: the GST Adjustments account, the ITC Adjustments account, and the GST Payroll Deductions account (if you have one).

The invoice total should equal your refund amount, as calculated on the GST/HST return.

6. From the Report menu, choose Display Sales Transaction Detail to check the entry. The amount the government owes you should be shown as a debit to the Bank account.
7. Click Record to record the entry. The amounts remain in the GST accounts until you record payment of the refund.
8. When you receive the refund cheque, open the Receipts window and enter a receipt for the Receiver General. This removes the reported GST amounts from the accounts to prepare for the next reporting period.

If you want to check that you have properly cleared the GST accounts:

1. Create a temporary copy of your company files and switch to accrual-basis accounting in the temporary copy.
2. Print a balance sheet. If you cleared the accounts properly, the GST account balances should be zero in the temporary accrual-basis copy of your company files. If the balances are not zero, check the steps you took to adjust the GST report and account for a refund to see where the error occurred.