Under the old GST rules, charities and qualifying non-profit organizations could claim a rebate of 50% of the GST paid on purchases. It was relatively easy to set up Quickbooks and Simply Accounting to track the 50% refundable portion and record the non-refundable portion in the expense on each purchase by manipulating the settings for the GST and PST tax codes.

The new HST rules make setting up Quickbooks and Simply Accounting more complex.  Now these organizations can receive a 50% rebate on the 5% Federal portion of the HST, and an 82% rebate on the 8% (in Ontario) Provincial portion.  The Federal and Provincial portions must be tracked and reported separately.

RLB’s Bookkeeping Support Specialists can help!  We can set up Quickbooks or Simply Accounting to track the refundable Federal and Provincial portions of the HST separately.  The non-refundable portions are recorded as part of the expense on each purchase.  This allows organizations that include the non-refundable portion of the GST/HST in their expense budgets to automatically record it with each entry, instead of via adjusting journal entries.

A few caveats:

• This fix is not part of the standard Quickbooks functions – it is a work-around.  The work-around disables the “File Sales Tax” module in Quickbooks.  Setting up this work-around means that the special reports and other features in the “File Sales Tax” module are no longer available, and returns will need to be calculated manually.  Simply Accounting’s sales tax features are not affected.
• This work-around only works with Quickbooks 2008 or higher.  Earlier versions of Quickbooks can not be set up to break out different refundable portions of the HST on each transaction.  Clients using older versions of Quickbooks must upgrade to the current version in order to use this set-up.  However, this setup works with all versions of Simply Accounting.
• Transactions posted prior to setting up the work-around will need to be changed individually to the new tax set-up.

To learn more about setting up HST in Quickbooks or Simply Accounting for charities/non-profit organizations, please contact one of RLB’s Bookkeeping Support Specialists.