How to enter GST and QST from a vendor invoice

The rates to know in Quebec

In Quebec, a taxable invoice usually carries two taxes: GST at 5% and QST at 9.975%. Since 2013, QST is calculated on the price before GST, no longer on the price including GST.

A supplier from a harmonized province, such as Ontario, charges HST instead of GST and QST. Enter the HST as it is: don't recalculate it into GST and QST.

What the invoice must show to claim the credits

To claim an ITC or ITR, the invoice must show certain information, depending on its amount. Since January 1, 2021, the thresholds are:

• Under $100: the supplier's name, the date and the total amount.
• $100 to $499.99: also the supplier's registration numbers for GST (9 digits followed by RT0001) and QST (10 digits followed by TQ0001), and the tax amount or a statement that taxes are included.
• $500 and over: also your name, the payment terms and a sufficient description of the goods or services.

In QuickBooks, Sage and Business Central

The principle is the same everywhere: each invoice line gets a tax code, and the software calculates or carries the tax amounts. Only the names of the settings change.

• QuickBooks Online: on each line of the Bill, pick the tax code that combines GST and QST for Quebec. If the calculated total is a few cents off the invoice, adjust the tax amount to match the invoice.
• Sage Accounting: each line of the purchase invoice carries a tax rate (GST, QST, or both). Check that the supplier has the right default rate, then compare the tax total with the invoice.
• Business Central: in the Canadian version, taxes go through the supplier's tax area and each item's or account's tax group. A wrong tax area applies the wrong combination of taxes to the whole invoice.

In every case, the amount that counts is the invoice's, not the one the software recalculates. The invoice is what you will be asked for in an audit.

The most common mistakes

1. Calculating QST on the price including GST, as before 2013: a few cents off per invoice, until nothing balances.
2. Rounding line by line when the supplier rounds on the total, or the other way round.
3. Carrying only one tax from an invoice that has two, or entering the tax-included total without breaking it down.
4. Forgetting zero-rated or exempt items on a mixed invoice: not everything on it is taxable.
5. Converting HST into GST and QST for a supplier outside Quebec.

With Scanee

Scanee reads the invoice and extracts the subtotal, taxes and total, line by line. You compare the amounts with the invoice, side by side, then the invoice is created in your software with its PDF attached, and your software applies the taxes. The source document stays with the entry.

Want the supplier's GST and QST numbers too? Add them as fields to extract: see the guide Create fields.

See also: QuickBooks Online, Sage and Business Central. Or test one of your invoices with the free extractor.