How to record an HST rebate in QuickBooks

Hi there, 

Thanks for joining the discussion forum in the QuickBooks Community! This is a great place to share ideas, and ask questions. 

I want to make sure you're given the best advice possible on how to record your HST rebate from your new vehicle in QuickBooks Self-Employed. If your accountant has advised you to deduct this from your monthly payments to Revenue Canada, our Self-Employed team can help you reflect this in your books. 

To contact the designated Self-Employed team, please fill out the email form found here: Contact Us. When you navigate to this website, you'll be prompted to select your product. Click QuickBooks Self-Employed. 

The Self-Employed team specialize in this version of the product, and they'll have all the necessary information needed to assist you with this. I'm confident they'll be able to get you back on track in no time. 

Let me know if you have any other questions. 

Have a great day!

Hello @cparksmobiletruckrepair ,

Are you a sole proprietor or an incorporated company and are you registered for the GST?

If you are a sole proprietor, even if you are registered for GST, you cannot claim the ITC (Input Tax Credit) for GST on the purchase of a vehicle, as the vehicle is owned by yourself, an individual.  As such, it would not be recorded in your business books at all.  As a sole proprietor, the way you get your GST back is through your T1 personal income tax return on Form T2125, by claiming the vehicle as an asset with depreciation.  You are allowed to include the entire price of the vehicle up to a maximum of $30,000 + GST, PST or HST for Class 10.1 (any vehicle classified as a passenger vehicle and costs more than $30,000 pre-tax) or Class 10 (vehicles classified as motor /passenger vehicles with a cost of less than $30,000 pre-tax).  Then you slowly recover the GST you paid on that vehicle through Depreciation (or CCA - Capital Cost Allowance) as CRA calls it.  There is a box you check on that form to indicate that GST is included in your opening CCA amount or not.

It should also be noted that as a sole proprietor, you cannot enter 100% of your vehicle costs into your books and claim them all in your business, ie Fuel, Maintenance, Insurance, etc..  Again, this is handled on the Form T2125 on your personal income tax return.  The total vehicle expenses are entered into the T2125, and then you must enter your Total KM and the KM's you drove in the year for business purposes.  Whatever percentage of the whole is then applied to your vehicle expenses and you are allowed to claim only that amount for that year.  If you want to enter all your vehicle expenses into your QB business account for the sake of simplicity and tracking to get a total, you can do that but you will have to make an adjustment at the end of the year to remove the personal portion of these expenses from your books by making an entry to CR the applicable vehicle expenses and DR your Owner's Equity:Withdrawals account.  Doing this will enable you to match your QB P & L to your income tax form T2124, which is a good check and balance as to what numbers you are reporting.

It is a completely different story if you are an incorporated company and are registered for the GST.  If that is the case, then you can record the purchase of the vehicle in your business books and use the GST tax code on the appropriate lines.  Your JE or payment to the bank would look something like this: (example is based on $30K purchase price of vehicle, with SK taxes)

Because you would be using the QB tax code for GST purchases, you would realize your refund when you file your GST remittance for the period, providing the GST you paid on business purchases (including the vehicle) are more than the GST you collect on your sales.  The vehicle depreciation is then taken care of on the T2 Corporate Tax return which is where your accountant will determine the CCA for this vehicle each year.

Thank you Rochelley.  We are a sole proprietor the vehicle is used 40% of the time for business use.  I am not to sure why my accountant had said that.  I guess I need to find another one.  

Yes, unfortunately, it's never quite as simple as some people make it sound.  There is so much knowledge that is necessary to do your own books for your own small business and most people don't have the time or inclination to learn it all, which I don't blame them for.  They got into business to sell their product or service, not to do bookkeeping.  As simple as QB likes to promote their products as being, without accounting knowledge you can still get yourself into quite a mess. 

Having said that though, that is exactly how I learned everything I know today, by owning my own small business for many years and couldn't afford to hire a proper bookkeeper or accountant, so I just learned it as I went.  I probably have made every mistake there was to make but today I am far wiser for it.

I wish you all the best in your business endeavour.  And if you really are having trouble figuring it all out, hire a good bookkeeper (one that has some qualifications such as education, experience and uses Quickbooks products), not just a year-end accountant.  They are worth their weight in gold and will keep you on track in your books.