Many countries have a very complex sales tax setup which requires the use of external services in order to stay up-to-date. Fortunately, in Canada this is not the case. With taxes at only the federal and provincial jurisdictions, there are not many tax setups that are required. While all provinces require GST/HST to be paid regardless of where in Canada you are located, PST is only required to be charged if you are registered in those provinces.
Microsoft Dynamics AX 2012 allows for a simple setup of Canadian sales taxes. The system allows for the calculation of different sales tax rates by province for both the GST/HST requirements and for PST, as needed. The system is also well suited for calculating the monthly remittances to the Canadian Revenue Agency (CRA) and provincial authorities with full audit backup.
How To Set Up Canadian Sales Tax Remittance in AX 2012
In Microsoft Dynamics AX 2012, link your Sales tax authorities to a Vendor for sales tax. This allows the sales tax setup to automatically create a Payable transaction for sales tax remittances.
Navigate to: General Ledger ? Setup ? Sales tax ? Sales tax authorities
Set up the appropriate Sales tax settlement periods for your sales tax reporting. This ensures that the sales tax remittance process will calculate and report on the correct calendar periods.
- Navigate to: General ledger Setup ? Sales tax ? Sales tax settlement periods.
- Enter the appropriate Terms of payment and Period interval
- After adding the first period manually, click on New period to add additional periods.
Make sure that your Sales tax code links to the appropriate Settlement period.
Navigate to: General ledger ? Setup ? Sales tax ? Sales tax codes
It is a good idea to make sure that all Accounts payable and Accounts receivable transactions require a Sales tax group, even if the transaction is exempt. This ensures that you are not missing any sales tax transactions. It also makes certain that you report on all sales, not just the taxable ones; a requirement for most sales tax jurisdictions.
Navigate to: Accounts payable ? Setup ? Accounts payable parameters
Navigate to: Accounts receivable ? Setup ? Accounts receivable parameters
To run your monthly Sales tax remittance report/Accounts payable update, perform the following:
- Navigate to: General ledger > Periodic > Sales tax payments > Sales tax payments
- Select the appropriate Settlement period and enter the date range.
- Select the appropriate Sales tax payment version, using the guide below:
- Original – Use for the first run.
- Corrections – Sales tax transactions that are not included in the first posted settlement.
- Latest corrections – Sales tax transactions included in the most recent settlement calculation for the period.
- Total list – All sales tax transactions to be settled in the current period.
- You can run the report repeatedly without UPDATE checked for review before posting. Once you are ready to post the transactions and set up the Vendor payable for the Sales tax authority, check the UPDATE box.
- The printed report provides both a summary of the total sales tax payable by sales tax code as well as a detailed list of transactions by sales tax code and by type of transactions (A/R, A/P, GL…)
Setting up Canadian sales tax remittances is a cinch with Microsoft Dynamics AX! Be sure to set this up today and make your next tax remittance a breeze. Contact our team of financial experts at BDO Solutions for more information – we always love to hear from you.
As a finance executive, Sheldon has extensive experience in strategic planning and analysis, financial management and corporate accounting. Sheldon is a leading Microsoft Dynamics AX consultant with project management and ERP implementation expertise.