Hello experts,
Canada PST is a retail Sales Tax that applies when taxable goods, software or services are acquired in in some provinces like B.C. or brought into B.C. for use in B.C., unless a specific exemption applies. The exempt companies apply and receive an exemption number and letter. We can enter this exception number in the customer profile and select what kind of exemption is. So far so good.
In the Taxes configuration we have a checkbox called “Include in VAT Exempt Tax”. This checkbox is enabled only if the “VAT” is selected as Tax Type. We need to keep the PST as “Sales” because it is what really is and importantly we are expensing it on purchases as it is not VAT so can be reclaimed.
I can do a bit of customization to make the checkbox available on Sales as well but I am not sure what is going to be the side effects.
What logically system should do is to allow in customer profile user select the exemption number entered applies to what taxes and when an AR/AP invoice or other documents entered, if a customer/vendor is exempt, will mark the related tax zero rated so it clearly shows there was applicable taxes but are set to zero rate because vendor/customer is exempt.
We do not want to leave this to user to update the taxes per document as it is extra work and considering the volume opens door for errors and government audit challenges.
I am reaching out to see how others are handling Canada PST exemption without duplicating all provinces taxes to exempt/nonexempt or duplicating zones? They still won’t be answer because logically we should print the exemption number in front of the applicable tax and show it zero rated.
