1. HST

2.  Harmonized Sales Tax  Combination of GST and PST – New effective July 1 2010  Complex!!! Lots of rules

3. HST Roles  Roles of Seller Charges Collects Remits  Roles of Consumer Pays

4. New Accounts for GST/HST 1. GST/HST Payable Like Accounts Payable for the Gov’t 2. GST/HST Recoverable Considered a contra-liability –(A liability account) Accumulates the HST that the company is entitled to receive back from the government Both new accounts are liabilities

5. New Liability Accounts Liability  “Bad thing” for a business  works like all liabilities Use standard approach:  Increase liability CR  Decrease Liability DR Contra–liability  “Good thing” for a business (can think of it as having value like an asset)  It is a Liability account  Works differently  Holds an exceptional balance for a liability  Special approach:  Increase contra-liability DR  Decrease contra-liability CR GST PayableGST Recoverable

6. $ HST Tax $1.30 $ Hair Products $1,000 $ HST Tax$130 HST Collected from customers Is Owed to the Government… GST/HST Payable HST Paid out to other businesses is refunded by the government… GST/HST recoverable $ HST Tax $1.30 $HST Tax$130 $ Hair Cut $10 $130 – 1.30 = $128.7 $128.7

7. Transaction #1- Recording a sale  Provide a hair cut for $10 cash. Cash 11.30 Sales10 HST Payable 1.30

8. Transaction #2 – Recording a purchase  Purchased $1000 worth of Hair products (shampoo, conditioner etc.) Hair Supplies1000 HST Recoverable 130 Cash1130

9. Transaction #3 – Remitting HST  Collected $1.30, paid $130  Difference is $128.70 – So the government pays us back! Cash 128.70 HST Payable 1.30 HST Recoverable 130