GST/HST ? Input Tax Credits

The only time you get ITC is at the time of purchase. If you did not purchase the vehicle AFTER obtaining your GST number and include the amount of the GST in your input tax credits for the period, you do not have an input tax credit to claim.

CCA is for personal income taxes where you do not get to claim a business owned vehicle depreciation.

Talk to your accountant.

Hi Stephanie, thanks for responding.

My understanding is that I am able to bring into this business any capital property held and on hand at the time I became a G/HST registrant, and at that time I could claim any G/HST paid on capital property being transferred by claiming an Input Tax Credit. My question is how do I set this up in Quickbooks? I have various tools and equipment, including a vehicle that will all be now used in the business. Again my understanding is that I can, based on fair market value of the items, claim an ITC for them.

Am I missing something here? Was I misinformed?

Again my question is simply how do I set this up in Quickbooks,

Thanks again,

I am not an expert on GST/HST. Please talk to your accountant.

I've just checked the GST guide and pages 16 and 17 say the following:

You may claim the ITC on a purchase of capital property if the capital property is used at least 50% of the time for business. In regards to a vehicle, you may claim the ITC on the CCA at a rate of 7% for GST or 15% for HST. For capital personal property conversion, it gets complicated when you convert from exempt to commercial use or from commercial use to exempt.

But, please go see an accountant about the rules for this, and how to set up QB to accomplish this task.

Hi again, Stephanie,

I have talked to an accountant and she told me that I can claim an ITC and she even went as far as calculating the ITC based on CCA and FMV. The problem I am having is entering this transaction into Quickbooks. The accountant was not familiar enough with Quickbooks, to explain to me how to do it.

If anyone can offer a solution, it would be appreciated.

Thanks again,

Why are you calculating your CCA now? Is this for your 2005 taxes?

EG:

Depreciation Expense 5,278.00 GST ITC 688.00 Accumulated Dep'n 5,278.00 (Credit amount) 688.00

There should be an additional Credit of 688.00 but I am not sure where that would be posted. THAT info should come from your Accountant. My only thought is it would be to Due to Owner Equity account.

Keep in mind, the above is a YEARLY posting. But posting your CCA in QB when you are a sole proprietor seems a bit over the top for me considering the vehicle SHOULD NOT be on the business books in the first place, unless you keep ALL your income and expenses there. If you DO have the vehicle on the books (not recommended), then you should post the FMV at the time you started the business (REMEMBER TO HAVE DOCUMENTATION OF HOW THIS VALUE WAS DETERMINED, and NOT BY YOU) as a Fixed Asset, eg. Vehicles account.

Stephanie

Could it be that you are looking for the Opening Balance / HST Payable Journal entry?

Something like

Debit Credit Opening Balance Equity $688.00 HST Payable $688.00

Just wondering. Arno