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:
- 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).
- Create a sales invoice with the Receiver General as the customer. How?
- In the Home window, click Customers & Sales on the navigation pane.
- In the Tasks pane, right-click the Sales Invoices icon and select Create Invoice from the menu.
- Select Pay Later in the Paid
- Enter an invoice
number, such as GST Q1 for the first quarterly
GST refund, and enter the date.
- Enter the amounts
and account numbers for all GST accounts, as follows:
- 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
- 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.
- 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.
- 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.
- Click Record
to record the entry. The amounts remain in the GST accounts until you
record payment of the refund.
- 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:
- Create a temporary
copy of your company files and switch
to accrual-basis accounting in the temporary copy.
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.