GST Charged Incorrectly?

by Peggy
(Alberta, Canada)

Contra Payment Made on Sales Invoice

Contra Payment Made on Sales Invoice

My client is a corporation. He is the only shareholder/director.


On a few of his bills that he sent out, he deducted some money that he owed the client for gasoline. Then he charged 5% GST on the reduced amount. This makes his GST charged less than it should be.

I have posted his invoices the way they were provided to me. When it's time to file his GST return, the revenue amount x 5% will not equal the GST charged. How would I make an adjustment for this?



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Hi Peggy,

Hmmm. The gas is really a contra payment. Sales tax should have been charged on the gross amount. You should have a payable for the amount of gas owing where you are claiming the ITC. When you apply the contra payment to the sales invoice, your offset is the payable.

I would be tempted to restate the invoice but not send it to the customer if your boss feels his way is "correct". (Make sure a really good memo note is included about what you are doing and why) and write-off the amount that you will be short when the customer pays the account. This way your GST reporting is still accurate and correct.

Remember, when you write-off a bad debt, you must prorate the applicable amount of sales tax too.




P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

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Feb 11, 2015
Book Keeper
by: Meagan

I am doing my AB GST quarterly. My customer sales total x 5% GST charged to sales is different than my accounting software totals. Also my GST charged on purchases is different than the actual purchase GST charged. Which numbers should I be using to correctly remit GST? ( I am out only $30.00 but I want to make sure I am paying the correct amount. Please advise. Thanks.

Feb 14, 2015
Maegan
by: Lake

I'm not sure how you know the sales tax software is providing the incorrect numbers. It almost sounds like you are tracking your GST manually and using accounting software ... which sounds like a lot of work to me.

If this was me and I thought the accounting software was not reporting properly, I would run the detail tax report that supports each line of the summary report. I'd also run the exception report which shows you changes to prior periods that you have already filed.

Then I would go through both the detail and exception report line by line to see where the problem lies. If I couldn't find anything wrong, I'd be more likely to trust my accounting software to be reporting properly than any manual records I may also be keeping in parallel ...

Of course I'm assuming the sales tax module was setup and is being used correctly.


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