On July 1st the announced GST reduction comes into effect. This means that all billing and reporting modules that currently employ GST calculations will need to be adjusted to set the rate to six percent at that time. For companies that have a fairly clean month-end this should not be a problem. You can complete all invoicing for June and then set the rate to six percent before invoicing for July. Companies that overlap invoicing based on submission of time cards and such may have to juggle invoicing in batches at the two rates.
For most companies the change in GST rates is not significant since the rates they charge and pay are going down at the same time. Companies only remit the difference between GST collected and paid so it has little effect on purchasing decisions. End users on the other hand will pay one percent less for goods in July, so there may be a mild slump in sales in June rebounding in July for those companies affected.
For the most part, billing modules permit the change of tax rates fairly easily. The occasional report or calculation may be hard coded at a fixed rate and these programs will need to be changed in July at some time.
A brief list of programs that require GST changes:
Go into Order Entry to the <F3> Setup Menu.
Select 61. Table & List Maintenance.
Select Tax Rates Table Maintenance.
Press <F8> to call up next tax record.
For each GST item at 7% set to 6% and press <F10>
Press <F8> again to scan for additional GST rates
Some clients deal with multiple provinces, so several rates may need to be adjusted. I assume HST rates will also drop to 14% although this needs to be confirmed.
Visual Accounting Features
Anyone that uses the Visual Accounting Features module to run Tax Reconciliation Reports will need to adjust tax rates in 91. Edit Company Constants as well, before running the end of July Reports. Keep in mind that you may need to reset rates to 7% if you run reports for time periods prior to July 1st at some future time.
Most custom billing modules will have tax rates built into the Company Constants. This is most often located in either <F3> Setup or <F8> Utilities menus. Look for a program that is called either Company File Maintenance or Edit Company Constants and check for the existence of tax rates that you can change. If you are sure that your program uses GST calculations but cannot locate a place to change rates call us in advance of the end of June to make sure that you will be compliant on July 1st.
A short list of common modules using GST rates:
- Order Entry
- Time Accounting
- Personnel Invoicing
- Property Management
- Marina Work Order Processing
Should the current government remain in power a future reduction in GST to five percent is promised sometime in the next five years.
GST Rates can take the form of tax rates in the Tenant File or Event Records in the Event File. In either case mass changes are required to update these tax rates.
You can change Tenant Rates prior to assessing July or create Event Records dated July 1st to accommodate the change. The method you use will be dictated by the way that your taxes are currently set up in the module.
If this task is too time consuming we can create programs to update Property Management Records via some form of Mass Update. A minor expense that can save a good deal of work.
Custom Report Writer Reports
Some clients have created custom reports using Libra’s Report Writers that incorporate formulas to calculate GST. These formulas will need to be edited to conform to the new rates. In many cases you can copy the report to a new report format and change the rate there, which provides for one report at 7% and another at 6%. Most reports can be altered later on in July for this purpose.