I would like to know the bookkeeping treatment for a transaction including PST (British Columbia).
I’m located in Ontario & taxpayer’s business is as well.
Business registered for BC sales tax (PST) because it planned to expand sales market to BC.
Taxpayer went to BC to meet prospects and purchased a few items.
I spoke to someone at the BC sales tax office today, they mentioned that PST paid is an expense and cannot be claimed as an input tax credit if purchaser is the end user (exception inventory).
My bookkeeping example:
Purchased $10.00 notepad (meetings).
= $10.00 + GST $0.50 + PST $0.70
DT Office expense $10.70 (PST tax included)
DT HST/GST $0.50 (claim ITC - GST/HST return)
CT Bank $11.20
For meal expenses to meet prospects it would be similar to the above transaction except for only 50% of the HST/GST can be claimed with the other half going to the meal and entertainment expense category. Meal expenses are only expensed 50% on the income tax return.
For this period taxpayer had no sales yet - file a nil return.
They are in talks of making a sale for the next period so there may be something to remit in the future.
My example entry of $1,000 sale:
DT Bank $1,120.00
CT Sales $1,000.00
CT GST/HST $50.00 (remit - GST/HST return)
CT PST $70.00 (remit - PST return)
Can anyone comment?