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Level 1

What do all the "0% Purchases" options in the GST/HST drop down menu mean?

This is a 2 part question. QB is telling me I need to assign a HST/GST type to a monthly bank account fee I am trying to add as an expense but I don't know which option to select (I assume it's 0% tax). I have the following options but don't know which one applies or what all the 0% purchase options mean. Can anyone tell me what to select but also expand on what each option is used for?

Exempt (0% Purchases)
Zero Rated (0% Purchases)
Out of Scope (0% Purchases)
HST ON (13% Purchases)

Solved
Best answer 03-11-2019

Best Answers
Highlighted
Anonymous
Not applicable

What do all the "0% Purchases" options in the GST/HST drop down menu mean?

This is just about getting to know the GST rules - which must have changed since i have no idea what "Out of Scope" is.  But for the others:

"Exempt" is a class of services which are always exempt from GST - these services are defined in the GST regulations. examples: Interest, life insurance premiums, federal & provincial taxes.

"Zero Rated" is for goods/services that are normally taxable - but in special situations the tax is not charged - ie: exported goods

"HST ON" is just your 'normal' taxable goods in Ontario where they have a combined sales tax called HST (instead of a PST+GST system). HST operates exactly like GST except for the rate.

View solution in original post

5 Comments
Highlighted
Anonymous
Not applicable

What do all the "0% Purchases" options in the GST/HST drop down menu mean?

This is just about getting to know the GST rules - which must have changed since i have no idea what "Out of Scope" is.  But for the others:

"Exempt" is a class of services which are always exempt from GST - these services are defined in the GST regulations. examples: Interest, life insurance premiums, federal & provincial taxes.

"Zero Rated" is for goods/services that are normally taxable - but in special situations the tax is not charged - ie: exported goods

"HST ON" is just your 'normal' taxable goods in Ontario where they have a combined sales tax called HST (instead of a PST+GST system). HST operates exactly like GST except for the rate.

View solution in original post

Highlighted
Level 1

What do all the "0% Purchases" options in the GST/HST drop down menu mean?

What about purchases for software or memberships online(US BASED) that do not charge tax ? Would that be out of scope ? If I'm getting paid for items sold in the US , where I am not collecting GST , what rate would I use for the deposits  ?

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Level 2

What do all the "0% Purchases" options in the GST/HST drop down menu mean?

What about purchases of food supplies (for resale as taxable meals)?  Are they zero rated or exempt?

Highlighted
Anonymous
Not applicable

What do all the "0% Purchases" options in the GST/HST drop down menu mean?

All purchases and sales outside of Canada can be classed as 'Z' for gst

Highlighted
Anonymous
Not applicable

What do all the "0% Purchases" options in the GST/HST drop down menu mean?

If you're buying goods in Canada and are not being charged GST then it must be "Exempt"