Hi Chris Reichelt ,

Thanks for reaching out. The Quick Method of Accounting for HST can indeed pose some unique challenges when it comes to handling the discrepancies between HST collected and remitted, especially since it seems Sage Accounting may not natively support this function.

Regarding your first question, the journal entry to record the difference as 'other income' seems to be a practical workaround. As you mentioned, this entry should be categorized under an "HST Quick Method Revenue" account and marked to include on tax returns.

For the second issue concerning the Input Tax Credits (ITCs) that were automatically captured and now appear as negative expenses, the approach you need might be similar to recording part recoverable taxes, as Sage Accounting does allow for the non-recoverable portion of taxes to be posted to a separate ledger account.

In your case, since you cannot claim ITCs under the Quick Method, you may need to adjust these entries manually. Essentially, you would reverse the automatic ITCs by creating an offsetting entry that debits the tax liability account and credits the expense account where the ITCs were initially recorded. This ensures your P&L reflects the actual expenses without the ITCs.

To track these amounts, consider setting up a dedicated account in your Chart of Accounts for these transactions, just as you would for self-assessed taxes, to keep a clear record and simplify your year-end reconciliation and tax filing.

Remember that Sage Accounting software does not automatically update the tax return with these adjustments, so you'll need to manually adjust the correct box on your tax return when filing.

If you're not sure about the steps or need further clarification, it might be helpful to consult with a tax professional or reach out to Sage support via chat for guidance specific to your situation. Hope this helps!

Warm Regards,
Erzsi

Thanks Erszi!

   Just to close the loop in case others find this thread, what I ended up doing for the expense side of things was

1) Move the ITC credit entry from the Corrections account to the GST/HST/QST Unreclaimable Tax Expenses account (9200)

This effectively zeroed out my Corrections account and my P&L sheet now looks correct.

Also, your tip to look at recording part recoverable taxes is a good one. I would suggest that if someone elects to use the quick method of accounting for HST, they should set their expense accounts to be 0% recoverable before they start recording. That way at least the ITC side of the HST return will be correct at the end of the year!