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Canadian NetSuite sales tax reports are critical to the running of a small business for every Canadian CFO. Especially given the fact that there exist reports specifically for GST & PST remittance for Canada. Getting the basics of these reports down is important so you can focus on delivering for your organization without worrying about surprise tax bills later on.
In this post, we’ll go over the three essential Canadian NetSuite sales tax reports every Canadian CFO needs, help you understand what taxes you need to charge province by province, and how to remit them.
If you are the Controller or CFO of a Canadian organization, then the assumption goes that you are familiar with sales tax in Canada. However, what if you are the CFO of an organization outside of Canada and have just acquired a Canadian company? Or, in another scenario, what if your company wants to open a subsidiary in Canada to operate on the Canadian market?
Here we explain the different types of sales tax in Canada.
In Canada, each province has its own method of calculating sales tax. There are three different tax models used in Canada and those are GST, HST, and PST. Each province uses a different model and it is important to understand them well.
The GST is a Federal, Canada wide tax that can show up in two different ways, depending on the province in which your business is registered.
If the province in which you are registered has PST, then GST is considered a separate tax, charged at a rate of 5%.
If the province in which you are registered does not have PST, then GST is considered a portion of HST which is a province-specific Harmonized Sales Tax (HST).
As of this writing, here is the list of provinces and the models they use:
Using HST, as a merchant, you would only have to collect and remit one tax (HST). In provinces using PST, a merchant must collect both GST and PST separately as they must be remitted to two different organizations (GST to the federal government, PST to the provincial government).
Use the following to understand the sales tax rates of Canadian provinces.
Province/Territory
British Columbia
Province-specific tax
7% Provincial Sales Tax (PST)
Goods and Services Tax (GST)
5%
Harmonized Sales Tax (HST)
-
Province/Territory
Alberta
Province-specific tax
-
Goods and Services Tax (GST)
5%
Harmonized Sales Tax (HST)
-
Province/Territory
Saskatchewan
Province-specific tax
6% Provincial Sales Tax (PST)
Goods and Services Tax (GST)
5%
Harmonized Sales Tax (HST)
-
Province/Territory
Manitoba
Province-specific tax
7% Retail Sales Tax (RST)
Goods and Services Tax (GST)
5%
Harmonized Sales Tax (HST)
-
Province/Territory
Ontario
Province-specific tax
-
Goods and Services Tax (GST)
-
Harmonized Sales Tax (HST)
13%
Province/Territory
Quebec
Province-specific tax
9.975% Quebec Sales Tax (QST)
Goods and Services Tax (GST)
5%
Harmonized Sales Tax (HST)
-
Province/Territory
New Brunswick
Province-specific tax
-
Goods and Services Tax (GST)
-
Harmonized Sales Tax (HST)
15%
Province/Territory
Nova Scotia
Province-specific tax
-
Goods and Services Tax (GST)
-
Harmonized Sales Tax (HST)
15%
Province/Territory
Prince Edward Island
Province-specific tax
-
Goods and Services Tax (GST)
-
Harmonized Sales Tax (HST)
15%
Province/Territory
Newfoundland and Labrador
Province-specific tax
-
Goods and Services Tax (GST)
-
Harmonized Sales Tax (HST)
15%
Province/Territory
Northwest Territories
Province-specific tax
-
Goods and Services Tax (GST)
5%
Harmonized Sales Tax (HST)
-
Province/Territory
Yukon
Province-specific tax
-
Goods and Services Tax (GST)
5%
Harmonized Sales Tax (HST)
-
Province/Territory
Nunavut
Province-specific tax
-
Goods and Services Tax (GST)
5%
Harmonized Sales Tax (HST)
-
There’s more to sales tax than just figuring out how much to charge. You also need to collect and remit it. And setting up NetSuite correctly to collect and remit it is important as that will feed your tax reports.
Businesses operating in Canada are required to collect sales tax. It’s one of the responsibilities of the business. There are very few exceptions, but they do exist.
If your business’s yearly revenue (before expenses) is under 30 000$ then you are exempt. Your last year is measured by the last four quarters of business operation.
Some specific goods would be considered exempt, for example, basic grocery items. You can see the full list on the CRA website.
As well, some customers may be exempt from paying sales tax. Generally speaking, Indigenous peoples, government, and diplomats are not required to pay GST or HST.
You must collect sales taxes (with the corresponding tax rate) in the province where your customer is receiving the goods or services. If your business and all of its customers are in the same province, this is easy. If they are not, you must charge the correct sales tax rate for your customer’s home province.
There is no need to collect taxes from international customers if the goods or services are being delivered to an address outside of Canada.
Now that you’ve prepared your invoices, you’ve collected tax: now what? You’ll need to send money to the CRA. Some small business owners overspend during the year and then struggle to pay back the tax money they’ve collected. It is important to keep close tabs on how much money you have collected in the form of sales tax and then set it aside for tax return time.
NetSuite provides Canadian CFO’s with a few tax reports that can greatly help when remitting to the CRA. Once the taxes have been set up correctly in NetSuite and are also being collected, it is time to start looking at the following reports to monitor your NetSuite Canadian sales tax.
Assumption: NetSuite Canada edition is being used.
The GST/HST on purchases summary report is a summary report of all sales tax paid on purchases. This report is used to indicate to the CRA how much you have paid to your suppliers in GST/HST. This amount can then be deducted from the sales tax you have collected in order to calculate the correct amount to remit to the CRA.
You can access this report by navigating to Reports -> Sales Tax Canada -> GST/HST on Purchases Summary.
The GST34 worksheet is a form that helps you fill out the GST34 worksheet for the CRA. It is not a replacement for the actual GST34 worksheet that must be sent to the CRA. This report uses accounting periods and shows you the amount of GST to remit to the CRA.
You can access this report by navigating to Reports -> Sales Tax Canada -> GST34 Worksheet.
One of the most common requests we get is to be able to see sales tax by province for the provinces that use the PST method.
To access this information, you can navigate to the Balance Sheet to take a look at how much tax has been collected by province as you should have a GL account for each sales tax.
You can navigate to the Balance Sheet by going to Reports -> Financial -> Balance Sheet.
Now, if that does not suffice, you can also customize the sales tax reports to use the shipping address of the transactions to group them by province. Then, you can sum your sales tax column and voilà, a Canadian NetSuite Sales Tax by Province report.
Maybe you’re not familiar with Canadian NetSuite sales tax and how they work or maybe you just need to access a few reports that give you what you need. Regardless, now you are equipped to make the most of your NetSuite instance and Canadian tax setup. Start working smarter, not harder by setting up NetSuite correctly and using its full power.
Have any Canadian sales tax tips? Let us know by filling out the contact us form below!
