GST/HST Rebates
A common question that came up from the auditor was in the area of outstanding receivable balances for GST/PST and accounting procedures for tracking and recording of Rebates.
Auditor's Comments: "The GST/PST Receivable accounts have large opening balances that are not cleared in the year......
Certain churches have been recording GST rebate cheques as revenue instead of offsetting accounts receivable.
The CRA allows for churches to track and claim a rebate for a percentage of the GST/HST paid on purchases. This is a great benefit and in some cases results in thousands of dollars being refunded! It is highly recommended that all Foursquare churches track and record these amounts in the accounting system and submit rebate claims in a timely manner.
IMPORTANT NOTE:
Some of the churches that recently submitted a GST/HST Rebate form are reporting that they received a letter back from CRA disallowing the claim because of the reporting period used. The national office GST Account is set up for quarterly reports. We have confirmed with CRA that they require all internal divisions registered under our business number to report on the same schedule.
If you have previously submitted the GST/HST Rebate yearly or bi-annually please begin to report on a quarterly basis. If the church received a letter like the one mentioned above, please complete new forms for quarterly periods (January-March, April-June, July-September, October-December) and resubmit for refund.
If the church needs Help! setting up a GST/HST Rebate account or with accounting and reporting procedures look below:
GST/HST Rebate Account
All Foursquare churches with a charitable registration are eligible for a Public Service Bodies (PSB) Rebate for GST/HST paid on purchases and expenses.
As an internal division of FGCC when the church has received its Charitable Registration number they can begin to claim a PSB Rebate. The national office will initiate this application on behalf of the church and notify when the registration number is received.
Once registered, the CRA will mail forms directly to the church. Rebate claim forms are to be submitted quarterly.
Eligible Purchases & Expenses
GST/HST may be claimed for rebate on the following purchases and expenses:
- General operating and overhead expenses, and administration expenses
- Reimbursements paid to employees and volunteers including mileage
- Capital property (equipment, vehicles, machinery, office furniture, computers, photocopiers used by charity for carrying out its activities)
GST/HST Rebate on Purchases
Amounts eligible for GST/HST Rebate are to be calculated and tracked at the time of recording the invoice or payment. This will ensure that no amounts are missed in the calculation at year end. It will also simplify the process when completing the Rebate application.
Calculating Rebate
The following is the procedure for calculating amounts:
- Determine total tax calculated for GST (5% of invoice) or HST (Federal/Provincial % of invoice)
- Multiply by the rebate percentages for the applicable province and record on invoice.
- Deduct rebate amount from the total amount of invoice and post amounts to GST/PST Receivable account.
- Record the net amount of the invoice to the appropriate expense account.
Tracking GST/HST Rebate
The tracking report system can be done with a spreadsheet/manual file or by recording an entry in the Sage accounting system for the rebate portion to a GST/PST receivable account when posting payable invoices. There should be an invoice or supporting documentation to substantiate each amount claimed.
A copy of the tracking report will need to be included with the GST/HST Rebate form. These are for file purposes only and do not need to be included with the form submitted to CRA. For manual systems this will be a copy of the spreadsheet/paper file. For Confluent Accounting users this will be a printout of the Transactions by Account report for both the GST and PST Receivable ledger accounts.
For those churches on the Sage Accounting system, these amounts are automatically calculated and posted to the GST/PST Receivable accounts when invoices are entered and paid.
GST/HST Claiming Rebate
GST/HST Rebates are to be claimed on a quarterly basis. When the church has completed its month end procedures and has recorded all invoices and payments it should apply for the Rebate.
For those provinces with GST only, the GST66 form will need to be completed. For those provinces with HST, both the GST66 and the RC7066 forms will need to be completed. A form should have been mailed to the church with due dates and reporting periods.
If a copy is not received fillable forms may be downloaded from the CRA website (www.cra-arc.gc.ca under Forms & Publications).
GST66 FORM: Application for GST/HST Public Service Bodies’ Rebate and GST Self-Government Refund
RC7066 FORM: Provincial Schedule – GST/HST Public Service Bodies’ Rebate
Completing the Form
1. Generate a copy of the Tracking System report or Transaction by Account report from the Confluent Accounting System for GST and PST Receivable.
2. Complete GST66: GST Rebate (GST & HST tax)
Complete Front Section:
A. The Registration Number is the Charitable Registration number of the church
B. The claim period for rebate – Fiscal Year from January to December
D. Certification – person who completed the form/contact person
Complete Back Section:
Enter total amount of GST Receivable from Tracking System Report or Transaction by Account report on Line 305
Enter Total amount of Federal Claim
Calculate Line 409 Total Amount Claimed:
Box A: Enter total from Federal Claim (GST66 Form)
Box B: Enter total from Provincial Claim (RC7066 Form) – see next
3. Complete RC7066: PST Rebate (HST only)
Complete Claimant Section: the Registration Number is the Charitable Registration number entered on the GST66 form.
Complete Back Section:
Enter total amount of PST Receivable from Tracking System Report or Transaction by Account report on Line 305 for Province and Total (Lines 1-5)
Enter Total provincial amounts claimed for amounts for Lines 1-5
Enter amount on Line B of GST66 form.
4. Take photocopies of all forms, both sides, and file (with Tracking Reports) in a pending file.
5. When payment is received, remove forms from pending file, and attach payment stub. Copy is to be provided to national office with Year End Review Confirmation.
6. Deposit payment and record in accounting system to reduce GST and PST Receivable accounts
Filing GST/HST through Net Filing
The church may be qualified to complete the GST/HST Rebate form through Net Filing on the CRA website. An Access Code is required and will be quoted on the GST/HST Return Form that is mailed to you (GST34-2E).
On the CRA Website www.cra-arc.gc.ca/menu-eng.html, under Online Services, choose GST/HST NETFILE
• On the GST/HST NETFILE page, choose “Ready to File”
• On the READY TO FILE page, click on “File your return”
• On the ONLINE FORM, complete the following:
Business Number (GST number)
Reporting Period
Access Code (from the GST34-2E form)
Do you want to file a Public Service Bodies’ Rebate? – YES
Are you required to report any of the following on your return? – NO
For this reporting period, are you required to recapture input tax credits…? – NO
Click on “Submit”
• On the PROVINCIAL SCHEDULE, choose the Province of reporting:
On LINE 305, enter the amount of GST being reported for rebate
Click “Calculate”, then “Next”
• On the FEDERAL SCHEDULE, choose the Province of reporting:
On LINE 305, enter the amount of GST being reported for rebate
Click “Calculate”, then “Next”
Offset on GST/HST Return? – NO
Do you certify…? – YES
Click “Next”
• Click “Submit”
Recording GST/HST Rebate
GST/HST Rebate amounts should not be recorded as an income amount in the accounting records. Nor should it be included in calculation for budget purposes. The amounts rebated will be reflected in the reduced expense totals.
GST/HST Rebate payments are posted as a deposit. GST Rebates should be posted to the GST/PST Receivable accounts and not as an income.