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How to set up Lodging Taxes for Québec

There are requirements unique to Revenu Québec when it comes to collecting lodging taxes. We’ve taken the guesswork out of how to set them up correctly.

Follow the steps below and you’ll be ready in no time to get it done right.

Note: it is necessary to complete the following steps in order.

Setting custom GST rate:

1. Select Taxes in the left navigator, then select Manage sales tax.
2. In the Tax agencies tab, select Add custom rate.
3. In the Tax name section, enter the name of your customer rate (for example, Lodging GST).
4. Under the Tax agency header, add a checkmark to I collect this on sales.
5. Enter the value 5.175 in the Tax on sales field.
6. For Account, select Liability.
7. For Show tax amount on return line, select GST/HST collected or collectible.
8. Click Add.

Setting custom QST rate:

1. Return to the Tax agencies tab and select Add custom rate.
2. In the drawer enter the name of your custom rate (for example, Lodging QST).
3. Under the Tax agency header, add a checkmark to I collect this on sales.
4. Enter the value 10.324125 in the Tax on sales field.
5. For Account, select Liability.
6. For Show tax amount on return line, select QST collected or collectible.
7. Click Add.

Setting start, frequency, and reporting methods

1. In the top right corner of the Tax agencies tab, select Add tax.
2. In the new drawer, select Add next to Add a custom tax and agency.
3. Enter a Tax name and a Tax agency name (for example, Lodging). The Tax name and Tax agency name may share a name.
4. Make selections for Next period starts, Filing frequency, and Reporting method based on your specific circumstances.
5. Check the box next to I collect this on sales and enter the value 3.50 for Tax on sales.
6. Select Add.

Combining taxes into a group rate

1. In the top right corner of the Tax agencies tab, select Add tax.
2. In the drawer, select Add next to Combine taxes into a group rate.
3. Enter a Group name (for example, Lodging).

It is essential to select the following taxes in the correct order:

4. In Tax rate, select Lodging (Sales) = [3.50%].
5. In the next Tax rate menu, select Lodging GST (Sales) = [5.175%] and in Applicable on, select Net amount.
6. Select Add another tax rate. In the Tax rate menu select Lodging QST (Sales) = [10.324125%] and in Applicable on, select Net amount.
7. Select Add.

Setting Lodging GST/QST to inactive

1. Return to the Tax agencies tab.
2. Select Make inactive next to the Lodging QST and Lodging GST tax rates you just created.
3. Click Done.

Now you’re all set to use your new custom rate for Lodging transactions.

Select it from the Sales Tax menu when creating invoices and sales receipts.

In the Sales Tax centre you will now see two tax cards, one for Revenu Québec and one for Lodging, respectfully. You will also see the Lodging taxes correctly calculated and reflected within your Revenu Québec return.

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