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Part Recoverable tax and non-profit organizations

Krista Nenn
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I am switching a client from an old version of Simply desktop (2011) to Sage Accounting Standard. They are a non-profit organization. In the old software I was just manually posting 50% of their GST paid on expense receipts to the GST Receivable account and the remainder of the balance was posted to the relevant expense account. 

I'm not sure if I can accomplish the same thing by using the part-recoverable tax setting in Accounting Standard. Would I just apply the setting to all the expense accounts? 

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    Suggested

    Hi  ,

    Great question — yes, you can handle this in Sage Accounting Standard using the part-recoverable tax setup, and it’s a good fit for the scenario you described with a non-profit.

    Instead of manually splitting the GST like you did in Simply Accounting, Sage Accounting lets you define a part-recoverable percentage so the system automatically:

    • Posts the recoverable portion (e.g., 50% of the GST) to your GST Receivable account, and
    • Posts the non-recoverable portion to the expense account.

    You generally wouldn’t apply this to every expense account by default — it’s best to apply the part-recoverable tax setting only to the expense accounts where that GST treatment applies.

    For step-by-step setup and examples, see: How Do I Record Part Recoverable Sales Tax on Expenses?.

    Once transactions are posted, if you need to review or audit how the tax was split (which is common for non-profits), you can export a detailed list of tax-related transactions here: How Do I Export a Detailed List of Transactions Associated with My Tax Return?.

    If you’d like, feel free to share whether the 50% recovery applies to all expenses or only certain categories — that can help fine-tune how you apply the setting.

    Hope this helps as you make the transition!

    Best Regards,
    Erzsi

  • 0 in reply to Erzsi_I

    Thank you, that's helpful! In this case, the recovery will apply to all of the expense accounts, other than exempt expenses.

    Thank you for the reply!

  • 0 in reply to Erzsi_I

    I have a follow-up question about this topic!

    My client (non-profit) does not collect any sales tax. They are entitled to claim 50% of their GST paid on eligible expenses, which I set up with the 'part-recoverable tax' option. Now that it's their year-end, the recoverable portion is showing up on the balance sheet under Liabilities (2310 GST/HST Paid on Purchases) as a negative amount. 

    They are used to seeing it as Federal Tax Receivable under Assets because I entered it manually in the old Simply Accounting 2011 desktop version they switched from. I'm not sure if I need to do anything different now. I'm having a hard time explaining why it's now a negative liability instead of an asset. 

  • 0 in reply to Krista Nenn
    Verified Answer

    Hi Krista, great follow-up question.

    In Sage Accounting, partially recoverable GST/HST is designed to post through the GST/HST control accounts, rather than directly to an asset account such as Federal Tax Receivable.

    When partially recoverable tax is enabled on an expense, Sage Accounting automatically:

    1. Splits the tax into recoverable and non-recoverable portions
    2. Posts the non-recoverable portion to the expense account
    3. Posts the recoverable portion to the GST/HST paid-on-purchases account

    These articles provide more detail:

    Because your client does not collect GST/HST, there is no offsetting GST/HST payable balance. As a result, the recoverable portion can appear on the Balance Sheet as a negative liability. That is expected behaviour and effectively represents a GST/HST refund or credit due.

    In older desktop versions, such as Simply Accounting 2011, this amount was often entered manually as Federal Tax Receivable under assets. In Sage Accounting, the same value is reflected within the GST/HST liability structure so tax reporting stays consistent and automated. You can also refer to Using Correct Transactions.

    No adjustment is usually required as long as:

    • the partially recoverable tax percentages are set correctly
    • the expense accounts are configured properly for partial recovery
    • the GST/HST reports match what is being claimed or rebated

    A simple way to explain it to the client is:

    Although it appears as a negative liability, it represents the same recoverable tax amount that may previously have shown as a receivable — it’s simply being reported differently.

    I hope that helps clarify what you’re seeing at year-end. If anyone else has handled this for a non-profit setup, feel free to share how you explained it to your client.

    If this helps, please mark it as verified White check markSlight smile

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