Enter a GST/HST Refund in Cash-Basis Accounting

If, after following the period-end procedures, you find that the government owes you a refund:

1. If you have not already done so, add a customer record for the Receiver General.

Note: On the Taxes tab, ensure that the Tax Exempt column is selected for GST/HST and PST (or QST, if you company is in Quebec).

2. Create a sales invoice with the Receiver General as the customer. How?  
   1. In the Home window, click Customers & Sales on the navigation pane.
   2. In the Tasks pane, right-click the Sales Invoices icon and select Create Invoice from the menu.
3. Select Pay Later in the Paid By box.
4. Enter an invoice number, such as GST/HST Q1 for the first quarterly GST/HST refund, and enter the date.
5. Enter the amounts and account numbers for all GST/HST accounts, as follows:
6. In the Amount box, enter the corrected GST/HST Paid amount from the GST/HST report, as a positive number. In the Account box, enter the GST/HST Paid On Purchases account number.
7. On the next line, enter the corrected GST/HST Charged amount from the GST/HST report, as a negative number, and the GST/HST Charged On Sales account number.
8. Similarly, enter the account balances and account numbers listed on the Transactions By Account report for the remaining GST/HST accounts: the GST/HST Adjustments account, the ITC Adjustments account, and the GST/HST Payroll Deductions account (if you have one).

The invoice total should equal your refund amount, as calculated on the GST/HST return.

6. From the Report menu, choose Display Sales Transaction Detail to check the entry. The amount the government owes you should be shown as a debit to the Bank account.
7. Click Record to record the entry. The amounts remain in the GST/HST accounts until you record payment of the refund.
8. When you receive the refund cheque, open the Receipts window and enter a receipt for the Receiver General. This removes the reported GST/HST amounts from the accounts to prepare for the next reporting period.

If you want to check that you have properly cleared the GST/HST accounts:

1. Create a temporary copy of your company files and switch to accrual-basis accounting in the temporary copy.
2. Print a balance sheet. If you cleared the accounts properly, the GST/HST account balances should be zero in the temporary accrual-basis copy of your company files. If the balances are not zero, check the steps you took to adjust the GST/HST report and account for a refund to see where the error occurred.