Every line on an invoice, sales receipt, estimate, bill, cheque or credit card charge carries its own tax code, shown in the line's Tax column. The code decides the tax charged on that line, and — through the account the code is mapped to — which return the tax lands on. This article explains where each line's code comes from and how to change it.
Where a line's tax comes from
| Where | The tax starts as |
|---|---|
| An item line (invoice, estimate, bill, Items tab of a cheque or card charge) | The tax set on the item. See Add or edit an item. |
| An Expenses line (bill, cheque, card charge) | The Usual tax (optional) set on the account you pick, if the line has no tax yet. See Add, edit, merge or make an account inactive. |
| A new item | The rate ticked as Default on the Sales Tax Code List. |
A line keeps the tax it was given unless you change it; re-picking the account on an Expenses line does not overwrite a tax you already chose.
Change the tax on a line
- Click the code in the line's Tax column.
- Pick another rate from the list (groups are marked group, with their percentage), or No tax.
The change applies to that line only. On a bill, Set tax for all lines above the lines applies one code to every line at once — useful because a vendor's bill is usually all one tax — and each line can still be changed afterwards.
What the tax code's colour means
| Shown | Meaning | What to do |
|---|---|---|
| A rate's name (grey) | The line is taxed at that rate. | Nothing. |
| — in amber | The item has no tax rate set, so the line is sold untaxed. The tooltip says so. | Pick the correct rate for the line, and fix the item so it does not happen again. |
| ? in red | The line names a tax rate this computer has not received yet. On a sale it is charged no tax; on a bill it is charged at the percentage the document recorded. | Pick a rate on the line, or let SeroBooks sync and reopen the document. |
| — in grey | No tax was chosen for the line. | Nothing, if the supply is exempt or zero-rated. |
Amounts that include tax (bills, cheques, card charges)
On the Expenses tab of a cheque or credit card charge, the amount you type is taken as including tax, because that is the figure on the receipt in your hand. When you leave the box it becomes the amount before tax, with the tax shown beside it, so the two add up to exactly what you typed. Tick EXCL. TAX on a line when the figure you are typing is before tax. The box cannot be ticked until the line has a tax code. The choice is saved with the line.
On a bill's Expenses tab, amounts are typed before tax unless the line is set otherwise. See Bill lines.
Customers who buy to resell
A customer who buys goods to resell pays GST but no provincial sales tax. Tick Buys to resell — no PST on the customer (see Add or edit a customer). Their invoices then carry the federal part of each rate only, and the note beside the tick reminds you to keep their exemption certificate on file. The same happens to freight on their invoices.
Tax by where the goods are going
For goods, Canadian sales tax follows the place of supply: a Vancouver business shipping to Toronto charges Ontario's 13% HST, not British Columbia's GST + PST. If your company taxes by destination, the invoice re-taxes each line by the ship-to province (or the customer's billing address when nothing ships) and says what it did:
- Shipping to … — taxed by place of supply, not the store's own rate.
- Shipping to … — n line(s) taxed by destination, n with no rule kept their own tax.
- Shipping to … — no tax rule is set up for it, so lines keep their own tax. Finish the tax matrix on the website, under Settings ▸ Tax Rates ▸ Tax Setup. The rules for each province are set up on the SeroBooks website, not in the app.
- Destination tax is on, but this customer has no province on file — every line keeps its own tax. Add a province to the customer's address.
Freight is taxed by where it is going, like the goods it carries. If your company does not tax by destination, none of this appears and each line keeps its item's tax.
On the printed invoice
The invoice PDF lists the tax by rate. A line with no tax prints as 0% tax on $… (tax exempt). See The printed invoice (PDF) explained.
What the tax does in the books
Tax on sales goes to the tax payable account its rate is mapped to; tax on purchases goes to input tax credits (GST/HST), input tax refunds (QST) or into the cost (PST, and all sales tax in a US company). See How sales tax works in SeroBooks.
Common problems
The invoice total is lower than the quote the customer was given. Check whether the customer is marked Buys to resell — no PST, or whether destination tax re-taxed the lines.
A bill arrived with PST but SeroBooks shows only GST. SeroBooks records what the vendor charged: pick the combined rate on the lines, or use Set tax for all lines.
The GST/HST return is short. A rate may not be mapped to a tax account. Check Which tax each rate is in Company ▸ Accounting Setup.