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dariaplek
June 1, 2021
Question

Examples of out of scope, exempt, and zero rated

  • June 1, 2021
  • 1 reply
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Hi! I had some questions regarding the differences between out of scope, exempt, and zero rated. I have looked at the CRA website and other quickbooks discussions and have not found the exact information I am looking for. In particular, I was hoping to get some specific examples for those three so I can make more accurate categorizations of the downloaded transactions. Further, I was wondering how bank fees and parking fees shoul be categorized in regards to the tax in Canada. 

Thank you in advance

1 reply

T
Tammy_H
June 1, 2021

Hi dariaplek,

 

Welcome to the QuickBooks Community. Here you'll find a wealth of knowledge at your fingers tips. QuickBooks Online has a dynamic sales tax module that makes tracking your taxes a snap. Let me explain the sales tax codes you've asked about because I want you to take full advantage of this module.

 

The sales tax code you'll use will depend on the type of transaction involved. Detailed explanations of when to use out-of-scope, zero-rated or exempt tax codes can be found on the Canada Revenue Agency's website. Out of scope is used when posting entries that are not taxable, like posting a journal entry relating to assets or liabilities. Zero-rated is used when dealing with items that you don't charge sales taxes on but may be eligible to claim input tax credits related to providing these goods, like basic groceries or agricultural products. Exempt is used when you don't charge sales tax, and you cannot claim any input tax credits, like childcare services or selling a personal residence. For more information on common Canadian sales tax codes based on the location of your company, review this article: Common sales tax codes.

 

If you're still unsure of which taxes you should be using, I suggest you contact your accountant. If you don't have one, you can find one through this link: Find an Accountant.

 

Reach out if you require any further assistance. Take care.

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