INTRODUCTION

Effective July 1, 2010 the provincial and federal sales tax rates will be as follows:

If you are shipping within Canada, the sales tax charged from a customer will depend on the province where you are shipping. If you ship to a non-HST province (Alberta, Manitoba, PEI, Quebec and Saskatchewan) you will continue following the current laws, i.e., charge them GST at 5%. In addition charge them the provincial sales tax at the appropriate rate. For example charge 10% for PST if shipping to a customer in Price Edward Island. Of course, if the customer is PST exempt in that province you will not charge the prpvincial sales tax. In other words nothing changes while selling to non-HST provinces.

If you ship to an HST-province (British Columbia, New Brujnswick, Newfoundland and Labrador, Nova Scotia and Ontario) you will charge HST at the rate applicable to that province. For instance, in case of shipments to British Columbia you will charge 12%.

If you ship only within Ontario you need not worry about different rates. You will generally charge 13% HST unless any of the customers fall within other categories for which you can call the HST Enquiry at 1-800-959-8287.

Your vendors from other provinces will follow the same rules while shipping to Ontario. Thus you will henceforth be charged 13% regardless of where your supplier is located within Canada.

At present you have two Tax Authorities, GST and PST defined in Tax Services. You also have related accounts defined in your chart of accounts:

(a). GST Payable (or GST collected), e.g., 2430
(b). GST Input Credit (or GST paid), e.g., 1150
(c). PST payable, e.g., 2440

The definition of GST shows that 100% of it is recoverable which means that the GST paid on purchases is debited to GST Input Credit Account. Similarly the GST collected on sales is credited to GST Payable Account. When you file GST Return you subtract the amount in GST Input Credit from GST Payable and remit the difference.

On the other hand PST is not recoverable. On non-exempt purchases it is distributed to the expenses to which the purchase invoice is applied. On sales, PST is credited to PST Payable account and remitted to the Government of Ontario.

There could be several strategies for implementing HST in Accounts Receivable and Accounts Payable but the strategy that we are using is to define a single Tax Authority called HST with Tax Rate 13% to cover sales to all customers in New Brunswick, Newfoundland and Ontario. All vendors charging 13% will also be assigned HST as the Tax Authority. We will also define two different Tax Authorities, HST12 with Tax Rate 12% for customers in British Columbia and HST15 with Tax Rate 15% for customers in Nova Scotia.

Step 1:

Set up new Tax Authority

Define new Tax Authority called HST. You may use the same pair of accounts that you used for GST or may prefer to define new accounts in your chart of accounts, e.g., 2431 for HST Payable and 1151 for HST Input Credit.

Define the following Tax Classes:

Define Tax Rates for HST

Define new Tax Group HST for sales and purchases containing Tax Authority HST.

Change the Tax Group for every customer in Canada to HST. You may do it as follows:

1. Export customers to an Excel file
2. Sort the worksheet by country (CODECTRY) and province (CODESTTE).
3. Keep only the customers from HST provinces and delete the rest from the worksheet.
4. Delete all columns except Customer ID (IDCUST), tax group (CODETAXGRP) and Tax Class (TAXSTTS1).
5. Change the tax group (CODETAXGRP) to HST.
6. Change the Tax Class (TAXSTTS1) as follows: 1 for Ontario, New Brunswick and Newfiundland, 2 for BC and 3 for Nova Scotia.
7. Delete all rows except Row 1 from the second sheet displaying optional fields.
8. Import the Excel file back into Accpac.
9. When setting up a new customer from an HST province, make sure that the Tax Group is HST and the Tax Class reflects proper tax percentage.

Change the Tax Group for every vendor in Canada to the proper value. You may do it as follows:

1. Export vendors to an Excel file
2. Sort the worksheet by country (CODECTRY) and province (CODESTTE).
3. Delete all foreign vendors from the worksheet.
4. Delete all columns except Vendor ID (VENDORID), tax group (CODETAXGRP) and Tax Class (TAXSTTS1)..
5. Change the tax group (CODETAXGRP) to HST.
6. Change the Tax Class (TAXSTTS1) to 1.
7. Delete all rows except Row 1 from the second sheet displaying optional fields.
8. Import the Excel file back into Accpac.
9. When setting up a new vendor from an HST province, make sure that the Tax Group is HST and the Tax Class is 1.