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Businesses with sales over $30,000 CDN must register for a business number and charge 7% GST on their services or products, (6% beginning July 1, 2006). Just like the provincial retail sales tax (PST), to be compliant with the government, you must report and remit these collections over to the goverment. About this extra 7% money - it is “trust funds” - this money is not your extra profit. It’s money you collected as an agent or on behalf of the government and believe me .. they want it.

The good news, is that everybody else is also charging you GST, and you are allowed to deduct these GST payouts, or “Input Tax Credits” (GST ITC’s), to offset the amout that you have to remit. It is for this basic reason that bookkeepers (and business owners) and ME … are quite conscious to be sure to correctly separate the GST ITC from the expense amount, in order to maximize the refund or minimize how much Net GST the client has to pay.

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There are two main reasons why businesses today should care about the proper coding of cheque stubs, before giving them to the accountant or bookkeeper for input and preparation of the monthly financial statements …

* (1) Because your accountant or bookkeeper was not present when you issued the cheque, it makes sense to put as much detail on the cheque as possible to describe why you issued the cheque .. instead of letting them guess what it is for

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