This faq explains how to make the necessary changes to your company file to prepare for the HST changes occurring on July 1, 2010. Updating your file may take some time. How long will it take?

Important! The following steps apply to QuickBooks EasyStart 2009 and 2008 only.  If you use 2010, following these steps.

Links to more information about the HST changes

• When should I start charging HST?
• Videos: Harmonized Sales Tax
• CRA: HST main page
• CRA: HST for Ontario
• CRA: Transitional rules
• Ontario government: Are you HST ready?
• CFIB: HST checklist for Ontario
• CGA booklet: HST in BC
• BC Government

Follow these steps to create the HST tax codes and items for Ontario or BC.

If you have transitional transactions, (in other words, you need to start charging HST before July 1), you cannot remit the provincial portion of the HST until your next filing period after July 1.

For more information on this, read this faq.

 

 

1. Go to the Company menu and select List, then Sales Tax Codes.
2. On the Sales Tax Code List, right-click anywhere and select New.
3. In the Sales Tax Code box, type HST (if not already used).
4. Select Taxable.
5. For the Tax item for Purchases, select Add New:
   
   • Set up a new sales tax item with these attributes: Name: HST on Purchases, Rate: 13% (for ON) 12% (for BC), Tax Agency: Receiver General, Return Line: 106
6. For the Tax item for Sales, select Add New:
   • Set up a new sales tax item with these attributes: Name: HST on Sales, Rate: 13% (for ON) 12% (for BC), Tax Agency: Receiver General, Return Line: 103
7. Click OK and Create another sales tax code and title it Z (for zero rated).
8. Title it  Z (for zero rated) and select Taxable.
9. For the Tax Item for Purchases, select Add New:
   
   • Set up a new sales tax item with these attributes: Name: HST (ITC) Zero Rated, Desc: HST on 0 rated purchases, Rate: 0.0%, Tax Agency: Receiver General, Return Line: 106
10. For the Tax item for Sales, select Add New:
    • Set up a new sales tax item with these attributes: Name: HST Zero Rated Sales, Rate: 0.0%, Tax Agency: Receiver General, Return Line: 103
11. Click OK.
12. You now need to create 4 more sales tax items using the following attributes. You can only create these items from the Sales Tax Code window, so open the Edit Sales Tax Code window now (go to Company, Lists, Sales Tax Codes).
    
    1. For the Tax Item for Purchase, select Add new -  Name: HST (ITC) Adjust, Desc: adjustment on purchases, Rate: 0.00%, Tax Agency: Receiver General, Return Line: 107. Click OK on the New Item window.
    2. For the Tax Item for Sales, select Add New - Name: HST adjust, Desc: HST adjustments on sale, Rate: 0.00%, Tax Agency: Receiver General, Return Line: 104. Click OK on the New Item window.
    3. For the Tax Item for Purchase, select Add new -  Name: HST instalments, Desc: instalments & NET tax paid, Rate: 0.00%, Tax Agency: Receiver General, Return Line: 110. Click OK on the New Item window.
    4. For the Tax Item for Purchases, select Add New - Name: HST Zero Rate Pur, Desc: HST on zero rated purchases, Rate: 0.00%, Tax Agency: Receiver General, Return Line: 106. Click OK on the New Item window.
    5. You are done setting up sales tax items. Now click the Cancel button on the Edit Salex Tax Code window.

Do not perform this step until July 1!

For every item and account that you assigned a sales tax code to, you have to update them now to use the new HST code. 

1. Edit your items to use the new HST code.
   1. Go to Company, Lists and select Item List.
   2. Right click on an item and select Edit Item.
   3. Change the Sales Tax Code to the new HST code.
2. Edit your Chart of Accounts to use the new HST codes.
   • Go to the Company, Lists and select Chart of Accounts.
   • Right click on an account and select Edit Account.
   • Change the Sales Tax Code to the new HST code.
3. Edit your sales tax preference to use the new HST code by default.
   •  Go to the File menu and select Preferences.
   • In the Default Sales TAx Codes section, for taxable items, select H (or whatever code your created for the HST code in step 1 above). For Non-taxable items, select Z (or whatever code you created for the zero-rated HST code in step 1 above).