QST calculation change on Jan. 1st, 2013

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MDufresne
Posts: 5
Joined: 14 Oct 2012 13:06
Product: Express
Region: Canada

QST calculation change on Jan. 1st, 2013

Post by MDufresne » 14 Oct 2012 13:18

On January 1st, 2013, the Quebec Sales Tax calculation method will change - its calculation base will no longer include the Government Sales Tax (GST). This document describes the changes -> http://www.finances.gouv.qc.ca/documents/bulletins/en/BULEN_2012-4-a-b.pdf.

I understand that it is not possible to change the structure of a tax code ("T" in this case) once it has been posted to. So it seems the only option available to us (Quebec customers) is to create a new tax code that doesn't have the multiplier. It is a cumbersome solution, as all accounts/vendors/customers that refer to the "T" tax code must then be updated to the new tax code - and because there is no changeover date, all 2012 invoices should be processed before making these changes.

My question is : will there be an update to account for this in MoneyWorks?

Thanks!

Marc

Note : the QST rate will also change, but this is easy to do in the current MoneyWorks Preferences.

grant
Posts: 318
Joined: 02 Jun 2004 17:42

Re: QST calculation change on Jan. 1st, 2013

Post by grant » 15 Oct 2012 10:36

Unfortunately, because the change is a structural change to the tax calculation, you will not be able to use the rate-change mechanism in MoneyWorks to make the change easily.

Instead you will have to set up a new taxcode, and change all the accounts that are currently on T to this new code (as well as customer/suppliers with a tax override). This is about a 5 minute operation using the MoneyWorks replace facility, and you should do it on or after 1st Jan 2013 (leaving the old T rate intact, as you will need to manually override transactions dated prior to 1st Jan).

We'll give more instructions closer the time.

MDufresne
Posts: 5
Joined: 14 Oct 2012 13:06
Product: Express
Region: Canada

Re: QST calculation change on Jan. 1st, 2013

Post by MDufresne » 17 Oct 2012 03:27

Removed : it seems my file was corrupted on YouSendIt.

grant
Posts: 318
Joined: 02 Jun 2004 17:42

Re: QST calculation change on Jan. 1st, 2013

Post by grant » 15 Nov 2012 10:57

On January 1st, 2013, the structure and rate of the QST will be changed. To quote the Revenu Québec web site:

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%.

The net effect of this, provided there is no further change in the GST and/or QST rate, is zero. Consider the following transaction for $1000 before tax:

Before 1st January, QST of 9.5% on the GST inclusive value:

Net Amount: $1000
+ GST on $1000 @ 5% = 50
Subtotal = $1050
+ QST on $1050 @ 9.5 = 99.75
Total = $1,149.75


After 1st January 2013, QST of 9.975 on the net (before GST)
Net Amount = $1000
+ GST on $1000 @ 5% = 50
+ QST on $1000 @ 9.975 = 99.75
Total = $1,149.75


You will note that the GST and QST amounts are the same.

So what needs to be done in MoneyWorks? You can get away with just continuing with no change (the GST and QST will be correctly calculated), provided that either the GST or QST rate never changes in the future. Hence it is probably preferable to change the QST to reflect the reality. Unfortunately because this is a structural change, you cannot just alter the rate.

Instead we suggest you make a new QST code (at 9.975%) and a new composite tax code (being GST + QST, instead of the current one which is GST * QST). To do this go to your Tax Rate table (under Show>Tax Rates) and click the New button to create a new tax code. We suggest the following settings (note that your QST received and paid account codes may be different - just tab through the empty fields to see what they are).

Image

Then make a new composite TAX code, which is GST + QST (the existing T code is GST * QST).

Image

On or after the 1st January, you will need to replace the taxcodes in your chart of accounts (and your customers/suppliers) with the new code.

To find the accounts with the old T tax code, select Show>Accounts to display the accounts list, click on the All tab on the left hand side to ensure that all accounts are displayed, and choose Select>Find. Set the lefthand pop-up menu to TaxCode and the right hand field to "T", as follows:

Image

And click Find. Just the accounts with the T tax code will be shown. Now highlight all these by pressing Ctrl/Cmd-A (or Edit>Select All), and then choose Select>Replace. Set the pop-up menu on the left to "Taxcode" and the field on the right to "TAX", as shown:

Image

and click Replace. Click OK when asked to confirm that you mean to update all the highlighted records.

You should also update all your customers and suppliers who have an override taxcode of "T". You can use the same Find for Taxcode="T" on all your Name records, but you will need to open each of the found ones and manually change the Override Tax Code (on the Pricing & Terms panel) to TAX.

For the transition period, in theory you should ensure that transactions dated before 1st January 2012 have a tax code of T, and those after a tax code of TAX. However you can probably ignore this as in practice it will make no difference to the tax calculated or displayed.

claudemlandry
Posts: 12
Joined: 28 May 2012 14:28
Product: Datacentre
Region: Canada

Re: QST calculation change on Jan. 1st, 2013

Post by claudemlandry » 18 Jan 2013 01:36

Thank you for the instructions.
Once the new tax setting is completed, is there a way to rename the tax code?

Following your example, I would like to rename:
- T to OLDT
- TAX to T

regards,
Claude

grant
Posts: 318
Joined: 02 Jun 2004 17:42

Re: QST calculation change on Jan. 1st, 2013

Post by grant » 21 Jan 2013 13:36

Tax codes cannot be renamed, so you will need to make a new one (and keep the old one). You need to check that you have changed the tax code in the chart of accounts, and also any tax overrides in the customer/supplier details.

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