Review the transaction before selecting the code
BC generally uses 5% GST on applicable taxable supplies, while PST generally uses 7% with important exceptions and different rates. GST place-of-supply rules can change the federal rate for transactions involving other provinces. PST applies according to its own taxable categories and exemptions.
A practical tax-code register records the product or service, the reason for the treatment and who reviewed it. Revisit it when the business adds an offering or a supplier changes its invoice. A code copied from another business is not evidence that the transaction was classified correctly.
Keep purchase recovery distinct
GST input tax credits depend on eligibility and supporting records. BC PST has no corresponding input-credit system. A purchase made for resale and an item bought for the business's own use can require different PST treatment; missing supplier tax may also need review.
Save the full invoice, not just the payment notification. The reviewer needs to understand what was purchased, the tax shown and the use of the item. Mark unresolved treatment questions so they are addressed before a return is finalized.
Illustrative example: two separate sales-tax balances
Assume a Victoria retailer makes $20,000 of sales that are all taxable at 5% GST and 7% PST, with no returns, exemptions or other sales. It records $1,000 GST and $1,400 PST on those sales. These are distinct amounts even if the customer pays them together.
Assume further that the GST calculation has $350 of eligible, documented input tax credits and no other adjustments. The simplified GST amount is $650. Those GST credits do not reduce the $1,400 PST sales balance. The final returns still require all relevant transactions, purchase obligations and other adjustments.
Reconcile the ledger to what was filed and paid
For each tax account, show the opening amount, current activity, adjustments, filed amount and payment. Retain confirmation of filing separately from confirmation of payment; completing one does not demonstrate the other. Explain any balance that remains after a reporting period is settled.
Before the next filing, confirm the reporting period, responsible preparer, authorized filer and payment approver. The best control is a reconciliation someone can reproduce. A calculator or a combined percentage on a sales report is a planning aid, not a substitute for that record.
Put this into practice
Sources and current guidance
A practical next step
Bring the records you have.
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