GST Administrative Adjustment

by Frankie
(Cranbrook, BC)

How to Record CRA Administrative Adjustments

How to Record CRA Administrative Adjustments

When you file sales tax with a balance of less than $2.00 the CRA states that a sales tax balance will not be charged (or refunded). On my Notice of Assessment it lists this as an "Administrative Adjustment". How should I record this? Does it offset another expense? If so which one?


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Great question.

I don't know how others handle this, but I enter a bill and / or credit memo for any administrative adjustment with Receiver General as the supplier / vendor.

When you filed your return, you will have the $2 liability sitting in A/P or GST/HST Suspense (if you use QBO). Therefore your offsetting entry needs to "pay" the liability outstanding. Make sense? After you create the credit memo for this, you will have to ensure you apply the credit to the liability to clear it from your books.

If you are ever charged penalties and/or interest, then I expense this to an account called CRA Interest & Penalties because it is not tax deductible.

Also to make reconciliations easier, I usually have three suppliers/vendors for CRA. One to track sales tax related payments, another for tracking payroll related payments and the last one is to track income tax related payments.

So if this were my books, my supplier/vendor would be Receiver General - GST/HST.

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