How do I set up sales tax to track meals and entertainment expenses?
Last updated: May 31, 2011
Article ID: HOW15449
Watch this video on how to track Meals and Entertainment.Step 1 Creating a Tax Vendor
. This video is 1:30Step 2: Creating Sales Tax Items.
This video is 1:36Step 3: Creating a Sales Tax Group
. This video is 1:12Step 4: Creating a Sales Tax Code.
This video is 1:03
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STEP 1 - Create a Tax Vendor
Create a vendor to track the portion of GST that can't be claimed as an input tax credit on your GST return. Click here for steps on creating this tax vendor. Then, proceed to Step 2, where you will assign this vendor to the ineligible GST sales tax item and create an eligible sales tax item.
STEP 2 - Create two Sales Tax Items
Create two sales tax items that make up the 5% GST Tax Rate. Create one item called "GST Eligible 2.5%", which is the portion of the GST that is claimable on the GST Return. Create another sales tax item called "GST Ineligible 2.5%", which is the portion of the GST that is not claimable on the GST Return. Click here for steps on creating these sales tax items. Then, proceed to Step 3 and use these items to create a sales tax group.
STEP 3 - Create a Sales Tax Group
Create a sales tax group that includes the two sales tax items you just created. This makes up the 5% GST Rate. Click here for steps on creating this sales tax group. Proceed to Step 4 and assign this group to your sales tax code.
STEP 4 - Create Sales Tax Code
Create a new sales tax code that tracks the sales tax group you just created. Click here for steps on creating this sales tax code. Now, proceed to Step 5 and apply this code to your Meals & Entertainment Expense account.
STEP 5 - Assign the Sales Tax Code to your Meals & Entertainment Expense account
Assign the sales tax code to your Meal & Entertainment Expense account, *so the code automatically applies to all transactions related to meals and expenses. If you do not have a Meals & Entertainment Expense account, create one. Search the in-product Help for "accounts, adding".
GST should not be calculated on tips. An input tax credit cannot be claimed on tips that did not include GST.