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How do I post a year end adjusting entry for personal portion of GST ITCs claimed on vehicle expenses?

For 2018 I had claimed all of the GST paid on auto expenses as an ITC as the expenses are incurred, and now I want to make a year-end adjustment equal to the personal portion of all ITCs claimed during the year, to adjust out the personal portion, if that makes sense. The business use of vehicle was 68%, so I need to adjust out 32% of the personal portion of the ITC. Do I do this with a journal entry? And if so, I tried doing that and in the Sales Tax Column, it gives option such as "GST/HST (ITC) ZR - Line 106" and "GST (ITC) - Line 106" and many other options...I have no idea which one to choose.
4 Comments
Frequent Explorer **

Re: How do I post a year end adjusting entry for personal portion of GST ITCs claimed on vehicle expenses?

Hi B? I am assuming you're adjusting for a self-employed person and not an employee? 

You'd want to adjust the ITC's claimed on the next GST/HST report, so you're going to want to adjust the GST/HST Payable account at the same time as you record the personal amount of the expenses and their associated ITC's. 

 

What I recommend is that you record a reduction of cost and associated ITC as a negative sub-account of each of those categories in order to record the gross amounts per line item on the T2125 form, and a reduction so that at the end of the year, you're able to match your P&L to the total of the T2125.

 

Select the Sales Tax module, and select to Prepare a return. See those adjust's on the far right column? That's where you're going to adjust the sales taxes if you want to do it directly in the Sales Tax Module.

 

Alternatively, you could prepare a journal entry to record all of your personal amounts and the taxes on those amounts and record it at the end of the period you're reporting for. 

 

For a self-employed person, record the personal portion of meals, vehicle and home office this way all at once as an adjusting entry, and in addition, record the ITC on CCA recovery for business km's driven on a personal vehicle not previously claimed. 

https://www.youtube.com/watch?v=PpnN0NDkMXg

A 20 minute look at where to find resources and information about self-employed reporting. Stressing the importance of keeping records for everything personal as well as business to minimize risk of audit. Links mentioned include: http://www.taxdetective.ca/selfemployed.html ...
Frequent Explorer **

Re: How do I post a year end adjusting entry for personal portion of GST ITCs claimed on vehicle expenses?

Hi B?

 

I also offered a 5 hour webinar series for IPBC members on record keeping for non corporate and if you're a member, it's available for members for PD on my ERWebinarLibrary page.

Frequent Explorer **

Re: How do I post a year end adjusting entry for personal portion of GST ITCs claimed on vehicle expenses?

Hi B? As for which line to choose, ZR would be zero rated. You'll find if you open the report you'll find the line you need.

Frequent Explorer **

Re: How do I post a year end adjusting entry for personal portion of GST ITCs claimed on vehicle expenses?

The rules for corporate are not the same as those for self-employed especially for vehicles. Can you advise if this is corporate or self-employed?