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Tax

Sales Tax on Goods

Sales tax on the supply of goods — registration, records, returns, and the reconciliations that follow when the system, the invoice and the return all have to say the same thing.

  • Manufacturers
  • Importers
  • Distributors
  • Retail chains
  • Wholesalers

What we are usually called about

The questions this work arrives with

None of these is unusual and none of them is a failing. They are what happens when a business grows faster than the records, the systems and the filings that describe it.

The system decides what the return says

The figures are settled from the same data the ERP and the point of sale produce. A great many disputes begin as a configuration decision rather than as a tax decision.

Input tax that cannot be supported

Supplier invoices that do not match the purchase record, credit notes raised outside the system, and buying done against no order at all. Each is either recoverable tax nobody claimed or a position that is hard to defend.

Classification of what is supplied

The treatment of an item follows from how it is classified, and the same item can often be argued into more than one heading. A view taken once applies to every invoice issued since.

Registration and records

Whether registration is required, what records have to be kept, and where they are kept when three systems each hold part of the answer.

Notices, audits and reconciliations

Answering a notice usually means reconciling the return to the ledger and the ledger to the system, in that order, before anything is written.

How the work runs

What an engagement looks like

Scope and fees are agreed in advance and in writing, before any of this starts. Where a step turns out not to be needed, it is dropped rather than billed.

  1. 01

    Position review

    Establishing what is supplied, how it is recorded, what has been filed so far, and where the gaps are.

  2. 02

    Reconciliation

    Return to ledger, ledger to system, with the differences explained rather than adjusted away.

  3. 03

    Written position

    Where a treatment is uncertain, a written analysis of the options and the basis for the one recommended.

  4. 04

    Filing and compliance

    Preparing or reviewing periodic returns from the underlying records rather than from a summary of them.

  5. 05

    Representation

    Replying to notices and dealing with the authority on the file, on the record.

Scope

What an engagement can cover

A list of what the work can include, not a package. What is actually needed is settled after the first conversation and written into the engagement letter.

  • Registration and de-registration support
  • Review of how supplies are recorded in the ERP or point-of-sale system
  • Preparation or review of periodic returns
  • Input tax reviews and reconciliation to the purchase ledger
  • Written analysis of classification questions
  • Correspondence, notices and audit representation

Federal or provincial

Goods or services — the line between the two regimes

Sales tax on goods is a federal matter. Sales tax on services is a provincial one, and each province administers its own regime under its own law and its own authority. The practical consequence is that a transaction has to sit on one side of that line, and both sides have an interest in where it sits.

Composite arrangements are where it gets decided: equipment supplied with installation, software supplied with configuration, goods delivered under a contract that also carries a service. How the contract is written and how the invoice is raised usually settle the answer before anybody thinks to ask the question.

Being wrong in either direction has a cost — tax accounted for to one authority and then demanded by the other, or input tax claimed against the wrong regime. Because this practice advises on both sides of the line, the question can be looked at once rather than twice.

No rate, threshold or filing date is given here. Those change, and a position on a specific transaction needs the current law and the contract itself in front of it.

Who this is for

Where this work usually comes from

Retail

Chains running an ERP and a point of sale, where stock, margin and every invoice are now reported in real time.

Pharmaceutical

Manufacture and distribution sold through a trade that settles half its margin outside the invoice — in bonus stock, credit terms, discounts and credit notes.

Alongside this

One practice handles all of it, so nobody is coordinating between a systems consultant, a tax adviser and a bookkeeper.

Tax

Income Tax

Returns, notices, audits and appeals

Systems & Assurance

ERP Advisory

Selection, implementation and migration

A notice on the file, or a classification you are not certain of?

You will get a plain answer on whether the practice can help, what it would involve, and what it would cost.

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