Zero Rate versus Exempt Tax Rates

Hi there Grind Hog for GET,

Making sure that your transactions are entered with the correct taxes is important. QuickBooks Online is a great tool that can help you keep track of your taxes on sales and purchases to make the process of filing your taxes easier. I can provide some information on the Exempt and Zero-rated tax codes.

While income made with both of these tax codes will affect line 101 of your tax return, which is your income, there is a difference when it comes to how they appear in the GST/HST detail report. Both of these types of transactions won't add to the balance of taxes, but transaction lines that have the Zero-rated tax code will appear on the report with no tax amount, whereas the lines with Exempt won't be included on the report. 

To know which tax code would be best to use for those sales made to American customers, I recommend reaching out to your accountant or local tax expert. Their accounting knowledge as well as an understanding of best business practices will be able to let you know which tax code is best to use for those sales. if you wish to add your accountant to your QuickBooks account, you can enter their contact info in the My accountant tab. You can also find one near you by clicking the Find a pro to help button on that page.

If you have any other questions, feel free to reach out here.