How to set up Canadian Sales Tax

Canada Tax Rates for ProfitSystem ‘Single Store'

Several areas of ProfitSystem must be set-up to properly account for taxes on purchases. The areas are: Chart of Accounts, Accounting Classes, Tax Rates, Tax Groups and Inventory.

A Canadian sales tax example: 5% PST tax on sales, 6% GST tax. There exists two scenarios. Set up the scenario that fits your shop, see below.

Scenario 1 is for the store that must charge both rates on all items sold. Step 1: a) Create a tax rate called PST b) Set the rate to 5 c) Set the tax group to RETAIL d) Set the Tax Revenue GL to 3001 e) Set the Tax Deposit GL to 4000

Step 2: a) Create a tax rate called GST b) Set the rate to 6 c) Set the tax group to RETAIL. d) Set the Tax Revenue GL to 3002 e) Set the Tax Deposit GL to 4000

Make sure that the accounting classes are assigned to the RETAIL tax group.

Scenario 2 for the store will sale some inventory items that should only have one of the two taxes applied. Add a new GL Account Number thru the ProfitSystem Chart of Accounts function. Call it called 3004 - Tax Retail Collected.

Step 1: a) Delete RETAIL tax group b) Create a tax rate called PST c) Set the rate to 5 d) Set the tax group to PST. e) Set the Tax Revenue GL to 3001 f) Set the Tax Deposit GL to 4000

Step 2: a) Create a tax rate called GST b) Set the rate to 6 c) Set the tax group to GST. d) Set the Tax Revenue GL to 3002 e) Set the Tax Deposit GL to 4000

Step 3: a) Create a tax rate called PSTBOTH b) Set the rate to 5 c) Set the tax group to BOTH d) Set the Tax Revenue GL to 3001 e) Set the Tax Deposit GL to 4000

Step 4: a) Create a tax rate called GSTBOTH b) Set the rate to 6 c) Set the tax group to BOTH. d) Set the Tax Revenue GL to 3002 e) Set the Tax Deposit GL to 4000

Also do: * Modify/Create accounting classes for inventory and assign one of the tax methods: * PST - Items sold will be charged PST only. * GST - Items sold will be charged GST only. * BOTH - Items sold will be charged both rates. * Finally, assign the correct accounting class (based on which taxes are to be used) to the inventory item within Inventory on the Inventory - Details tab. * With either option, go to Chart of Accounts and rename GL number 3001 from Retail Collected 1 to PST, and rename GL number 3002 from Retail Collected 2 to GST.