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How to set up QuickBooks to track the new QST in 2013

What is happening?

Changes to the QST System in 2013

Significant changes to the QST system will take effect on January 1, 2013. These new measures are further to a tax coordination agreement entered into by the governments of Canada and Québec on March 28, 2012.

Measures to take effect on January 1, 2013

New method for calculating the QST

As of January 1, 2013, the QST will be calculated on the selling price not including GST. However, to ensure the total taxes payable remain the same, the QST rate will be increased to 9.975%. For additional information pertaining to the changes to the QST, read changes to the QST.

Important: The following is applicable only if you currently have an existing company file created prior to January of 2013.  All new company files created on or after January 1st of 2013 will have the correct QST configuration. If you need additional assistance completing the steps outlined below please contact our Technical Support.

What does this article cover?
  1. Create New Sales Tax Liability Account
  2. Create New Vendor
  3. Create new GST & QST Sales Tax Items for Sales and Purchases
  4. Create the new Sales Tax Groups for Sales and Purchases
  5. Create New Sales Tax Code
  6. Important Things to Remember

Follow the steps below to configure QuickBooks for the new QST.

Step 1 - Create New Sales Tax Liability Account

Note: Where referred to, Ministère du Revenu can also be named Revenue Quebec.  This article uses Ministère du Revenu.

  1. Press CTRL–A to bring up your Chart of Accounts.
  2. Press CTRL-N to bring up a New Account creation window.
  3. Select the radio button to the left of the Other Account Types option.
  4. From the drop-down menu, select: Other Current Liability.
  5. Click Continue.
  6. In the field Account Name enter: ‘QST/GST Payable. If this is to be a subaccount of a Master Sales Tax account then select that account from the Subaccount of: drop-down menu.
  7. In the Description field enter 'Québec 2013 Sales Tax.'
  8. Click Save & Close.

Step 2 – Create New Vendor

(Optional) -Rename old Ministère du Revenu to Ministère du Rev. (2).

  1. From the Vendor Center, select: New Vendor.
  2. In the field VENDOR NAME call the new vendor: 'Ministère du Revenu'.
  3. Click on the Sales Tax Settings tab.
  4. Place a checkmark in the field: Vendor is a Sales Tax Agency.
  5. From the TAX RETURN drop-down menu, select: GST/HST/QST Combined Return.
  6. Place a checkmark in the field to the left of: Track tax on sales separately to, and from the drop-down menu select the liability account you created in Section 1.
  7. Place a checkmark in the field to the left of Track tax on purchases separately to and from the drop-down menu select the liability account you created in section 1.
  8. Note: do NOT checkmark the box entitled: Taxes for this agency is calculated on other taxes (piggy back) – Quebec taxes will no longer be piggy-backed.
  9. Click OK.

Step 3 - Create new GST & QST Sales Tax Items for Sales and Purchases

A. Create Sales Tax Items for SALE

Create 5.0% Sales Tax Item for the GST portion of sales tax on SALES.

  1. From the Lists menu select: Item List
  2. Press CTRL-N on your keyboard to create a new item.
  3. From the drop-down menu, select:  Sales Tax Item.
  4. In the field Sales Tax Name enter: ‘GST–Sales’.
  5. In the Description field enter ‘GST portion of tax on Sales’.
  6. Enter 5.0% for the Tax Rate %.
  7. In the Tax Agency drop-down menu, select:  Ministère du Revenu.
  8. In the drop-down menu for Sales Tax Return Line, select: Line 103 GST/HST collected or collectible.
  9. Press Next.

Create 9.975% Sales Tax Item for the QST portion of sales tax on SALES.

  1. In the field Sales Tax Name enter: ‘QST– Sales.
  2. In the Description field enter ‘QST portion of tax on Sales’.
  3. Enter 9.975% for the Tax Rate %.
  4. In the Tax Agency drop-down menu, select:  Ministère du Revenu.
  5. In the drop-down menu for Sales Tax Return Line, select: Line 203 GST/HST collected or collectible.
  6. Press Next.

B. Create items for PURCHASES

Create 5.0% Sales Tax Item for the GST portion of sales tax on PURCHASES.

  1. In the field Sales Tax Name enter: ‘GST –Purch’.
  2. In the Description field enter ‘GST portion of sales tax on Purchases’.
  3. Enter 5.0% for the Tax Rate %.
  4. In the Tax Agency drop-down menu, select:  Ministère du Revenu.
  5. In the drop-down menu for Sales Tax Return Line, select:  Line 106 Input tax credits (ITCs).
  6. Press Next.

Create 9.975% Sales Tax Item for the QST portion of sales tax on PURCHASES.

  1. In the field Sales Tax Name enter: ‘QST –Purch’.
  2. In the Description field enter ‘QST portion of sales tax on Purchases’.
  3. Enter 9.975% for the Tax Rate %.
  4. In the Tax Agency drop-down menu, select:  Ministère du Revenu.
  5. In the drop-down menu for Sales Tax Return Line, select:  Line 206 Input tax refunds (ITRs).
  6. Press Next.

Step 4 - Create the new Sales Tax Groups for Sales and Purchases

Create the new Sales Tax Group for SALES

  1. In the drop-down menu under the heading Type this time select: Sales Tax Group.
  2. In the field Group Name/Number enter: ‘QST/GST-Sales’
  3. In the Description field enter: ‘QST/GST Sales Tax on Sales’.
  4. In the drop-down menu in the 1st line of the field entitled TAX ITEM, select: GST–Sales.
  5. In the 2nd line, select: QST-Sales.
  6. Press NEXT.

Create the new Sales Tax Group for PURCHASES

  1. In the field Group Name/Number enter: ‘QST/GST-Purchases’
  2. In the Description field enter: ‘QST/GST Tax on Purchases’.
  3. In the drop-down menu in the 1st line of the field entitled TAX ITEM, select: GST-Purch.
  4. In the 2nd line, select: QST-Purch.
  5. Press OK.

Step 5 – Create New Sales Tax Code

  1. From the Lists menu select: Sales Tax Code List.
  2. Double-click the tax code you currently use for transactions requiring both GST & QST (for this example 'S').
  3. Rename the tax code 'S' to 'S2' (if you named your tax code something other than 'S' just add a 2 on the end).
  4. Click on OK.
  5. From the Lists menu select: Sales Tax Code Lists (or press ALT+L+S).
  6. Press CTRL-N (or select: Sales Tax Code then New).
  7. Enter ‘S’ as the name for this new Sales Tax Code.
  8. In the Description field enter: QST/GST Standard Tax Code - 2013.
  9. Select: Taxable.
  10. In the drop-down menu for the field:  Tax Item for Purchases, select: QST/GST-Purchases.
  11. In the drop-down menu for the field: Tax Item for Sales, select: QST/GST-Sales.
  12. Click OK.

Step 6 - Important Things to Remember

  • Use your current Sales Tax Code, the ‘S2’ code, for all transactions up to and including December 31st, 2012.
  • Once the new QST regulations enter into effect in January 2013, you will absolutely have to use the new 'S' code as your main sales tax code for all transactions requiring both QST & GST.
  • In the event that a transaction requires only the use of a single sales tax code, either GST or QST, you will have to create new sales tax codes for both GST only and QST only.  Use the steps in Section 4 as a guide to do this.
  • When filing for the period ending December 31, 2012 use the old Tax Agency Vendor.
  • Beginning at the end of your first reporting period in 2013 you will need to create Tax agency reports and  file your sales tax using the new Tax Agency Vendor you created in Section 1 (in this example Ministère du Revenu).
  • Important: If your reporting period takes place partly in the year 2012 and the other in 2013, this will require that you produce Tax Agency Reports and Sales Tax Returns for both the old Ministère du Rev. (2) and the new Ministère du Revenue in QuickBooks, and then combine the totals for each Sales Tax Return together on the statement you send to the MRQ.
  • You will need to change the tax code in the field Taxable items in the Preferences menu to contain the new sales tax code 'S'.  - To change this select: Edit menu >Preferences > Sales Tax> Company Preferences (tab) there you will see the field Taxable Items; change the tax code to ‘S’.
  • You will also need to modify the default tax code currently assigned to customers and vendors.  In the individual profiles of each customer and supplier, if the sales tax code is the old code 'S2', it should be replaced with 'S'.

Important: You will also need to change the sales tax code on all memorized transactions to the new code otherwise sales tax tracking will be to the old liability account and transactions will be linked to the old Tax Agency vendor - Ministère du Rev. (2)).

To check if sales tax amounts have tracked incorrectly to the old account do the following:

At the end of your first reporting period in 2013:

  1. Generate a Tax Agency report for that period using the old vendor Ministère du Rev. (2) to see if there are amounts in the report on lines: 103, 203, 106 and 206.
  2. If you find the amounts on these lines, click on the amount to drill down to view a list of the transactions that gave rise to these amounts.
  3. Click on each transaction and correct the tax code to reflect the new ‘S’ code.  You must do this for ALL of the transactions on the list.
  4. Repeat for all 4 lines 103, 106, 203, & 206.



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