My income statement does not match Receiver General Report for HST filing?

Hi lrichard3,

QuickBooks Online offers tons of great financial reports so you can stay on top of your business health. Knowing how to analyze these reports is essential to ensure accuracy across your books. I'll be happy to assist you with this.

From what you're describing, it sounds like you're comparing the total income of your Profit and Loss (P&L) report to the taxable sales in your return (Line 101). These two amounts are designed with different goals and will often be different. Line 101 takes into account every transaction with a "tax code (sales)" on them (not "tax code (purchases)"), and the P&L considers any transaction directed towards an income account. In other words, the P&L uses the type of account you use to distinguish between income and expense transactions, and the tax report track by tax codes. Because of this mechanism, the two reports can sometimes be different. Let's say you have a Product/Service with a liability or expense account selected instead of an income account. When selling this item with a sales tax, it will count as Taxable sales, but not Income. In the same way, if you record a deposit selecting an income account and a tax rate (purchases), it will only count in the P&L.

So most of the time, differences between the income statement and your taxable sales in your return would be due to income journal entries/bank deposits with "tax code (purchases)", income accounts selected on expenses, or "tax code (purchases)" on sales. Here's an article for your reference: How to use reports to troubleshoot problems with sales tax amounts

It's also important to note that Line 101 doesn't affect the balance to be paid or received in your return. If you, however, would like to adjust it, I strongly recommend reaching out to your accountant. You can invite your accountant in your account by going to the My accountant menu and entering the appropriate email before confirming the invite. Alternatively, you can click on Find a pro to help to access our list of accountants.

I hope this helps to clarify how Line 101 and the P&L works. Do not hesitate to reach out if you have more questions.

Why on earth would QBO use the tax codes when the HST filing requires Sales an Other Revenue? This is so wrong. QBO really needs to get it together. So many things wrong with this program. :(

Hello Peaches1234. Your feedback is valuable and I'd like to make sure your voice is heard. I encourage you to send feedback directly to our engineers. You can do this by clicking the Gear icon and looking for Feedback. Product ideas and improvements are largely based on the feedback we get from users like you. 

QBO doesn't seem to realize that there are more problems being created by this functionality. 

For example, when a QBO user creates a reduction in an expense account from a refund deposit on the bank feed, the tax code is recorded to the (sales) type, rather than a reduction in (purchases) tax type or ITC. 

This results in the profit and loss showing a reduction in the correct expense account, while ADDING the dollar amount to line 101, essentially falsely over stating the income. 

The same thing can happen with the reverse, where there is a sales refund sent to a client and recorded using the bank feed. This will reduce the sales revenue figure on the P&L, but not on line 101. 

I am sure QBO would say "just don't categorize from the bank feed", but if the option is there, it will be used! 

This is such a problem for many of our clients and has resulted in a huge amount of lost hours to fix/reconcile the difference. 

QBO is unwilling to recognize this as an issue with their software, and insists that they are doing the correct thing. I have spoken to their tech support, who barely understood the issue I was describing and then told me to "speak to my accountant". We are an accounting firm!!!!

The solution to this would be that the tax code (sales) vs (purchase) should be applied to a transaction based on the general ledger account type (revenue or expense) NOT the transaction type!!!!

I have submitted the feedback AND had an hour long conversation with a QBO tech person who ended the conversation by saying that they do not understand what is happening and cannot help me. QBO doesn't seem to understand the consequences of how their software functions and also won't listen to their clients who are accounting professionals!