Tax Codes and Canadian Sales Tax

What a tax code is

A tax code is a named rate that StretchBooks applies to a line item to calculate tax. Codes are Canada-first out of the box — for example GST 5%, HST (Ontario) 13%, and Exempt / Zero-rated at 0%. Each code carries a title, a jurisdiction (for example CA, CA-AB, CA-ON), and a rate.

How the rate is stored and applied

Rates are stored in basis points, where 100 basis points = 1%. So GST 5% is stored as 500 and HST 13% as 1300. For each line, StretchBooks computes:

line subtotal = quantity × unit price
line tax      = round(line subtotal × rate_basis_points ÷ 10000)
line total    = line subtotal + line tax

The document's subtotal, tax, and total are the sums of its lines. Tax is calculated per line, so mixed-rate documents (some lines taxable, some exempt) are handled correctly.

Applying codes

• Per line: choose a tax code on each line item.
• Default tax code: set one in Settings and any line that doesn't specify a code inherits it.
• No tax: use an Exempt / Zero-rated code (0%) for lines that shouldn't be taxed, or leave the code empty if you have no default set.

Step-by-step: apply GST to an invoice

1. Open Invoices → New and choose your customer.
2. Add a line: description, quantity, and unit price.
3. In the line's Tax code field, select GST 5%.
4. StretchBooks shows the line tax and updates the invoice subtotal, tax, and total.
5. Repeat for other lines, mixing codes if needed (for example GST on services, Exempt on a disbursement).

Worked example

Northlight Coaching invoices a $900 engagement in Alberta:

• Line: 1:1 coaching session, qty 6, unit price $150.00, tax code GST 5%.
• Line subtotal $900.00, line tax $45.00, line total $945.00.
• Invoice total $945.00, of which $45.00 is GST.

For an Ontario client on HST (Ontario) 13%, the same $900 subtotal yields $117.00 tax and a $1,017.00 total.

Tax Summary report

The Tax Summary report rolls up, per tax code and period, your taxable sales and sales tax collected, your taxable purchases and purchase tax paid, and the net tax due (sales tax minus purchase tax). It's built to prepare a GST/HST remittance — sales tax you collected on invoices, less the tax you paid on expenses and bills. See Reading the Dashboard and Reports for how to run it.

Tips

• Set a default tax code matching your most common rate so you rarely touch the per-line field.
• Record tax on expenses and bills too — that's what lets the Tax Summary net your input tax credits against tax collected.
• Use Exempt / Zero-rated (not a blank field) for lines that are deliberately non-taxable, so the reason is explicit on the document.
• Match the jurisdiction of the code to where the sale happens (for example HST-ON for Ontario customers).

FAQ

Can I have more than one tax on a line (for example GST + PST)? Each line applies one tax code. Model combined rates with a single code at the combined rate, or split into separate lines if you need them itemized.

Why is the tax a cent off from my manual calculation? Tax is rounded per line to the nearest cent, then summed. Line-level rounding can differ by a cent from taxing the grand total once — this is standard and keeps each line internally consistent.

How do I stop charging tax on a customer? Apply an Exempt / Zero-rated code to their lines, or leave the tax code empty on those lines if you have no default.