GST & HST – MarginEdge

This article covers how our team processes Canadian taxes like GST and HST. We want you to understand how it will show up on your order and in your reporting in MarginEdge. For our Canadian clients, you will see an additional line on your Order called "Input Tax Credit" for your GST and HST. Like our other taxes, you will have the ability to set this line to book proportionately across the Categories represented in the invoice or book it to a single selected Category.

You can access these settings either in bulk through Vendors > Vendor > Default Settings or on a vendor by vendor basis through Vendors > Vendor > Edit Vendor.

For more information on how MarginEdge handles taxes:

How does MarginEdge handle Taxes, Delivery and other misc. charges?

Using Advanced Vendor Configuration Options (settings to apply across all vendors)

Things to Note:

GST/HST is not subject to tax exemptions when distributed across the Categories in an order. As is currently the case, only the "Taxes" line, when distributed across all Categories in an order, should be distributed to tax exempt products.
Unfortunately, while we know these need to be reported to a Global Tax Payable account, we cannot export these taxes to a Global Tax Payable account. Our system is exporting a value instead of a tax rate and so it gets rejected. If you want to record your GST to QuickBooks you'll need to create a clearing account for these values and adjust the mapping to be to this clearing account instead of to a Global Tax Payable account.

Buckle Up For More Detail

The team that transcribes invoices into MarginEdge will preferentially use product pricing without taxes and fees if available, but not all vendors provide unaltered pricing. So when the only provided pricing is inclusive of taxes, then that is what the team will use. This creates the issue that the invoice total will be correct while also including taxes. To resolve this issue we take advantage of the configurability of our miscellaneous charge fields.

Let's unpack this some more. Each type of miscellaneous charge (taxes/PST, Input Tax Credits, Delivery, Others, etc...) can be configured to book any value inputted proportionately across the categories coded on the invoice OR the charge can be configured to report the value to a single designated GL account.

For HST, we use the Input Tax Credit field and report it to a single GL. This means that when we enter HST, it will not be booked to the COGS/Expenses on the invoice the way other misc charges are but instead it is reported independently.

To resolve the issue of overstating COGS based on tax-inclusive pricing, we then take the HST amount and back it out of the reported expenses by recording it as a "Credit" or "Other". Since the "Other" misc. charge field is set to be applied proportionately to the COGS/Expenses, by inputting this value here, the software will now automatically - and proportionally - reduce the total HST from the reported COGS/Expenses without affecting the reported HST amount.

Some Examples

As described above, this invoice contains products with tax-inclusive pricing.

Because the unit price without deposit is provided, we use that and include the deposit as a separate line item.

The total HST amount is included at the bottom of the invoice:

Again, as described above, we include the HST in the Input Tax Credit field, then "back it out" of the COGS by including it as a credit.

You can see in the "Category Summary" view of the invoice that the HST is recorded and the HST amount that was included in the product prices is credited out of the COGS.

Hopefully this helps untangle the numbers you are seeing on your invoice! Reach out with any questions.