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Ivan4
March 12, 2019
Solved

What do all the "0% Purchases" options in the GST/HST drop down menu mean?

  • March 12, 2019
  • 2 replies
  • 0 views

This is a 2 part question. QB is telling me I need to assign a HST/GST type to a monthly bank account fee I am trying to add as an expense but I don't know which option to select (I assume it's 0% tax). I have the following options but don't know which one applies or what all the 0% purchase options mean. Can anyone tell me what to select but also expand on what each option is used for?

Exempt (0% Purchases)
Zero Rated (0% Purchases)
Out of Scope (0% Purchases)
HST ON (13% Purchases)

    Best answer by

    This is just about getting to know the GST rules - which must have changed since i have no idea what "Out of Scope" is.  But for the others:

    "Exempt" is a class of services which are always exempt from GST - these services are defined in the GST regulations. examples: Interest, life insurance premiums, federal & provincial taxes.

    "Zero Rated" is for goods/services that are normally taxable - but in special situations the tax is not charged - ie: exported goods

    "HST ON" is just your 'normal' taxable goods in Ontario where they have a combined sales tax called HST (instead of a PST+GST system). HST operates exactly like GST except for the rate.

    2 replies

    A
    Anonymous
    Answer
    March 12, 2019

    This is just about getting to know the GST rules - which must have changed since i have no idea what "Out of Scope" is.  But for the others:

    "Exempt" is a class of services which are always exempt from GST - these services are defined in the GST regulations. examples: Interest, life insurance premiums, federal & provincial taxes.

    "Zero Rated" is for goods/services that are normally taxable - but in special situations the tax is not charged - ie: exported goods

    "HST ON" is just your 'normal' taxable goods in Ontario where they have a combined sales tax called HST (instead of a PST+GST system). HST operates exactly like GST except for the rate.

      J
      Jacsla
      March 12, 2019

      What about purchases for software or memberships online(US BASED) that do not charge tax ? Would that be out of scope ? If I'm getting paid for items sold in the US , where I am not collecting GST , what rate would I use for the deposits  ?

        A
        Anonymous
        March 20, 2019

        All purchases and sales outside of Canada can be classed as 'Z' for gst

          M
          Meaghan4
          August 20, 2020

          Which one did you select? I have the same quesiton.

          N
          Norman_C
          August 21, 2020

          Hi Meaghan and others:

          To pick up from an earlier post:

          * E "Exempt" is a class of services which are always exempt from GST - these services are defined in the GST regulations. examples: Interest, life insurance premiums, federal & provincial taxes.

          * Z "Zero Rated" is for goods/services that are normally taxable - but in special situations the tax is not charged - ie: exported goods

          * HST "HST ON" is just your 'normal' taxable goods in Ontario where they have a combined sales tax called HST (instead of a PST+GST system). HST operates exactly like GST except for the rate.

          * Out of Scope 

          I think the trick is to be consistent .

          WRT the questions on :

          • Unprocessed or bulk food purchases for resale - I would go with "E"
          • Sales (incl subscriptions) from Canada to non-Canadian-based customers for use outside Canada - I would go with "Z"
          • "Out of scope" - I would reserve for non-taxable items such as depreciation, should QBO ask for a tax code

          My 2 c's worth

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