I dont charge hst, im a small supplier. ive adjusted to make sales tax inactive. but i have to choose something on the estimate, 'zero rated' or 'out of scope'? which one

Hi there, 

Taxes are inevitable in the world of business. I know how confusing it can get when trying to decide which tax code to choose if you're not charging sales tax for your products or services. QuickBooks Online has 3 options for non-taxable sales: Exempt, Zero-Rated, and Out-of-Scope. I'll explain the differences so you can make the best choice for your business.

The best thing you can do if you're unsure which of these sales tax codes to select is to review the CRA's Overview of charging and collecting sales tax. As explained in this article, "[t]he basic difference between zero-rated and exempt goods and services is that you can claim input tax credits for those that are zero-rated, while you cannot for those that are exempt". 

Out-of-Scope taxes, as explained in this helpful Community article, don't hit the tax center at all. These sales won't appear on Line 101 of your Income Tax Return. These sales are nontaxable goods and services (0% and not applicable taxable/non-taxable sales). 

It's up to you to decide which code is the best fit for your bookkeeping. If you're still unsure, I recommend consulting with an accountant to get the best advice. If you're not yet working with an accounting professional, you can connect with one in your area here: Find a ProAdvisor.

If you have any other questions, please reach out to our tech support team.

Cheers.