How to Enter Incorrectly Charged GST

by Steven
(Alberta, Canada)

Hello,

I have run into a few cases where small shops or retailers have incorrectly charged GST, and I didn't notice until it was too late. These purchases were for my small business (GST registered). Here are two examples:

1. I bought some taxable items at a corner store and they were keyed in as non-taxable, so no tax showed up on the receipt. I believe if the retailer catches this mistake later, they are required to submit taxes based on the amount charged, so should I enter the receipt the same way? I.e. Amount charged with no tax was 10.00. Should I enter it as 9.52 + .48 GST?

2. I had some vehicle work done at a shop and he incorrectly calculated the GST to one tenth of what it should have been. Should I use his numbers, or adjust the tax to the appropriate portion of the total paid?

Thank you.

Steven,

Take a look at CRA's requirements for a legitimate receipt here:

https://www.bookkeeping-essentials.com/audit-trail.html#legit

It is my understanding that you can only claim the GST/HST input tax credits shown on the invoice/receipt. If you feel there is a billing error, you need to go back to the retailer and sort it out.

If this is one of your regular suppliers, then asking them to adjust or correct the invoice should be no problem ... or they might explain why their billing is correct.

There are a lot of complicated rules surrounding GST/HST/PST that you may not be aware of ... especially related to food purchases. GST/HST is tax neutral to businesses who are GST/HST registrants.