Are sales taxes from purchases an expense?

Question

Hi,This seems like a dumb question to me, but I am really unsure.  Say Ipurchase and item and spend X dollars on sales tax.  Does that X countas an expense, or should I use it to credit my sales tax payableaccount?I'm not sure how an accounting program would do this.  Is it normal toassume that sales taxes that you spend reduce the amount of sales taxthat you must submit to the govt?  Does this depend on the country?  Iam curious about the following countries: US, Canada, Australia.Thanks!NL

Paul Thomas, CPA · Accepted Answer

"nicklang"  wroteSales tax paid on your purchases (other than inventory for resale) become an expense of that item and get treated accordingly.  So, for sales tax paid on office supplies, just include that with the total cost of those supplies. For the sales tax paid on a piece of equipment, that gets capitalized and depreciated with the equipment over a number of years.If you were to have paid sales tax on purchases that were for resale, then yes, take a credit for those sales taxes paid on your monthly sales tax report if your state allows for that.

TKnTexas · Answer

In most states if you are purchasing for resale you should give thevendor a resale certificate so that sales tax is not applied to theinvoices for those items.  I know that Louisiana and Mississippig (atleast for food and beverage purchases for resale) vendors charge thesales tax and then you take it as an offset to sales taxes charged onyour sales to customers.  The accounting treatment in this case wouldbe to debit the liability account for sales taxes payables for thesepurchases.TKPaul Thomas, CPA wrote:

Are sales taxes from purchases an expense?

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