When filing quarterly HST remittances using the Quick Accounting Method, how do I show my figures in my Profit and Loss statement?
By Hank Bulmash | May 31, 2013
If I am filing my quarterly HST remittances (Ontario - 13 per cent), using the Quick Accounting Method, how do I show my figures in my Profit & Loss statement?
Do I include the HST I charged on my invoice in the sales figure on my statement, or do I show it net of HST charged? And if I include the HST in all of my revenue and expense figures, do I also show the HST I paid on my remittance (8.8 per cent) for the year as an expense on my statement?
Hank Bulmash answered:
HST doesn't affect the income statement of your business. The HST you bill and receive and the HST you pay out are all reflected on your balance sheet only. If HST received was reflected in your revenues and HST paid was reflected in your expenses, your income taxes would be affected. HST should not affect your income taxes.
So ... you should set up HST accounts on your balance sheet. HST paid will go into a debit account (it's an asset like a receivable). HST received goes into a credit account (it's a liability since it's owed to CRA). Those accounts are netted against each other to determine your HST remittance to CRA or your HST refund from CRA.