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Diane18
March 12, 2019
Solved

Do you charge hst when accepting deposits

  • March 12, 2019
  • 3 replies
  • 0 views

We are a construction company that takes upfront deposits before we start a job.  So I make up a Sales Receipt for the 25% deposit.  Am I supposed to charge HST on the deposit, or wait until I do up a final invoice and subtract the deposit from the total?

Best answer by NEVER

No, GSt is not collected on a deposit or prepayment. If unsure, check the CRA website for guidance.

3 replies

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NEVERAnswer
March 12, 2019

No, GSt is not collected on a deposit or prepayment. If unsure, check the CRA website for guidance.

N
NEVER
March 12, 2019

Generally, sales tax is not charged on an initial deposit or pre-payment. Sales  tax is, however, charged on subsequent Draws.

D
Diane18Author
March 12, 2019
That's what I thought but wasn't sure.  Thanks
J
j936_2
July 23, 2019

My problem:  We sell rental space and take deposits (sometimes many) before the actual rental date.  Rental charges are subject to HST which is not payable until the final payment.  I do not wish to pay for the tax in advance, as it is not due until the rental date.  What would be the best way to set this up?  I have tried to work through estimates AND through jobs.  In each instance, I create the estimate for the entire job, create an invoice each time and post the deposit to the charge and not the HST.  The FINAL payment clears the balance of the charge plus the HST.  Reporting is a problem as the invoice is not clear for the client AND it is impossible to access the accounts receivable balance owing.  HELP please.

N
NEVER
July 25, 2019

In your situation, Estimates don't appear to be practical.

 

This is what I would do:

 

First, add a Note to the Customer Profile indicating the Total Rental amount + Taxes.  Notes are displayed in the Customer Information screen.

 

Next, use the Receive Payment function to receive the Deposit (there can be only 1 deposit) and Pre-payments. Received from: the Customer, From Account: Accounts Receivable. This will create a credit (or multiple credits in the Customer Account. The Payments (Credits) are also displayed in the Customer Info screen.

 

When the Credits are equal to the $ amount calculated in the Notes, create the Customer Invoice for the full amount. Apply the Credits to clear the balance.

 

 

 

 

S
SWSCYNDE
June 12, 2020

My customer's require an invoice to pay a deposit but they do not want to pay the sales tax or better put aren't required to pay the sales tax until the final payment is due.  How would I do this in QB?  Thanks!

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