A system for recording the amount of GST (and in Quebec there is also a 50% QST rebate) paid on invoices and receipts should be set up since 50% of the GST and QST paid is recoverable by the church. This is a feature available in computer software programs. If your bookkeeping system is manual, a procedure for recording GST (and QST) amounts needs to be set up. To do this, include a column for recording the 50% of the GST (and another column for the QST expense, i.e the GST/QST recoverable). This would be an asset. The other portion of the GST/QST would be added to the expense. (e.g. If the bill was $100 + $5 GST, you would charge $102.50 to the appropriate expense account and record $2.50 in the GST recoverable column). This example applies for Alberta, Saskatchewan, and Manitoba.
For Ontario, if the bill was $100 + $13 HST (13%), you would charge $103.94 to the appropriate expense account and record the $9.06 in the HST recoverable column. The $9.06 is calculated as the sum of:
a) 50% of $5 = $2.50 (the federal portion of the HST – ie. the old GST) and
b) 82% of $8 = $6.56 (the provincial portion of the HST – ie. the old Ontario sales tax now rolled into the HST).
The amount in a) above would be written on line 305 of CRA form GST284.
The amount in b) above would be written on line 305-ON of CRA form GST284.
For BC, if the bill was $100 + $12 HST (12%), you would charge $105.51 to the appropriate expense account and record the $6.49 in the HST recoverable column. The $6.49 is calculated as the sum of:
a) 50% of $5 = $2.50 (the federal portion of the HST – ie. the old GST) and
b) 57% of $7 = $3.99 (the provincial portion of the HST – ie. the old BC sales tax now rolled into the HST).
The amount in a) above would be written on line 305 of CRA form GST284.
The amount in b) above would be written on line 305-BC of CRA form GST284.
For Alberta, Saskatchewan, and Manitoba, the amount eligible for recovery is only 50% of the GST amount on the bill.
