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How do I adjust my sales tax liability?

You'll need to make an adjustment to your GST/HST, PST, or QST liability (what you owe) in the following situations:

  • You need to write off the tax portion of a bad debt.
  1. Example: If a customer's cheque bounces, you can write off the bad debt and claim back any sales tax you remitted to the government on the sale. You make the claim by adjusting your sales tax liability.If you just need to adjust the sales tax on a single transaction, for example, to adjust for rounding differences, edit the sales tax amount right on the transaction form.
  • You need to move money into or out of a sales tax liability account.
  1. Example: You need to pay a penalty or fine. You adjust your sales tax liability account to include the payment on the sales tax return.

Adjust the sales tax liability

  1. Select Taxes from the left menu
  2. Select Sales Tax at the top. (Tip: If you use payroll in QuickBooks Online, you may need to select Sales Tax as opposed to Payroll Tax)
  3. ​Next to Sales Tax at the top, find the tax agency associated with the return you'd like to adjust using the drop-down
  4. Select the Returns tab
  5. On the line item you wish to adjust, select Prepare return from the Action column
  6. Select Adjust to the right of the sales tax line you want to change
  7. Choose an Adjustment date and Tax rate
  8. Choose an account from the Adjustment account drop-down:
    • If you're making the adjustment because you received a credit and you owe less sales tax to the government, choose an income account that you created for this purpose
    • If you're making the adjustment to include a fine, penalty, or interest on a sales tax return, choose an expense account, such as Interest Expense or Non-deductible Penalties
  9. Enter the Adjustment amount
  10. (Optional) Enter a memo to describe the adjustment
  11. Select Save