Handling GST and PST from Credit Card tranactions

[Mark Johnson]

Why would you put GST and PST in an Asset account?  That money's gone.  
Transfer it directly from your Liability account (the credit card) to 
the Expense account(s) for GST/PST.  If/When I get a GST rebate, it is 
recorded in the rebate column (aka credit) with a deposit to my checking 
account (aka debit).

I'd recommend that you use the credit card's account register to record 
the tax paid when you record each purchase.  For each purchase, record 
the description.  Then click the split button on the toolbar.  Tab 
through the fields.  First, create a split for the purchase as a whole, 
which increases your card's balance by the total amount.  Next, create 
splits for each individual expense category, filling in the amounts for 
each as you create each split.  When done, these should equal the total 
charge.  Then, taxes are just another expense (easily the biggest one 
sadly...).

My tax account hierarchy looks like:
Expense
  -Tax
      -EI
      -CPP
      -Income
      -GST
  -many other expense accounts

I don't do your steps A & B at all, I just record transactions in the 
register.

Having just started recording GST as a separate expense at the beginning 
of this year (before I just attributed the tax to whatever I was 
purchasing), I'm quite surprised at how quickly it adds up.  I do 
recommend recording it separately like you do for that reason.

Does Ontario charge PST on the GST?  I know some provinces such as Nova 
Scotia do.  It increases the overall sales tax rate.

Here's a helpful hint.  Some gas stations don't show the GST separately 
on the receipt, but it's still part of the purchase price.  For these, I 
use gnucash's feature of allowing a calculation to be entered as the 
amount (eg. 32.95/1.07).  When I tab out of this field, the amount is 
calculated, and rounded (truncated?) to the nearest penny.  The 
remaining amount is automatically displayed for the next split, and all 
I have to do is choose the expense category for GST.

Hope this helps,
Mark

Russell Sutherland wrote:

> I am just about finished my conversion from Windows/QuickBooks to
> Linux/Debian GnuCash.
>
> There are still a few nagging minor issues, but my main quandry
> at present is how best to manage credit card purchases, most of
> which include GST and PST (at least in my case living in Ontario
> Canada).
>
> The GnuCash tutorial recommends that one simply record each
> purchase by performing a transfer from the Liability->Credit Card
> account directly to the Expense->Travel+Entertainment->Meals account.
> Then later in the month after reconciling a transfer is made
> from an Assest->Chequing Bank account to the Liability->Credit Card 
> account.
>
> This works fine, except some of the information on the specific
> vendor can only be recorded as a comment in the transfer line
> and more importantly, the fractional amount of the payment
> to the vendor which is tax (15% GST+PST) is not automatically
> captured in a Assest->GST+PST paid account.
>
> The only way I know of so far is cumbersome, but does
> seem to achieve the desired goal:
>
>     For each purchase:
>
>         a create a Bill from the Vendor, which allows the tax
>           splitting information to be captured
>
>         b Pay the Bill using the standard                           
> Business->Vendor->Process Payment step, transferring the           
> funds from the Liability-Credit Card account
>
>         c Once per month transfer a lump sum of money to the
>           Liability->Credit Card account from an assest account.
>
> Steps a and b are quite involved in terms of the number of steps 
> necessary. Is there any simpler way to perform these operations?
>