Tax regulation differs across countries around the globe. While some countries make it very simple to meet requirements, some countries, regions or states have very specific tax rules and laws that may apply to your business.
Canada for example requires businesses to charge the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST) for property related activities.
(See also: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses.html)
This article will show you how to accommodate such requirements in ManageCasa.
Unless you are a very small business and are exempt from charging taxes like GST/HST, you need to account for such taxes in your books and you must let your customers know if the tax is being applied to their purchases.
This may apply to rent charges, management fee charges and other goods and service charges.
We’ll look at two different scenarios where tax needs to be applied and shown:
- Recurring charges
- One-Time charges
For recurring tax charges on Management Fees for your services, you can take advantage of the percentage fee calculation in the Property Management Terms section of the software. Just add an additional term line item with the respective tax percentage based on your Management Fee line item amount.
Go to:
- Manage → Property Management Terms
- Select Click “Add Term”
- Scroll down to “Additional Terms”
- Select your respective Tax account (e.g. “HST Taxes”)
- Select “Management Fee” under “Frequency”
- Select “Percentage” under “Type”
- Enter applicable tax percentage under “Amount”
- Select “On” and “Management Fees” under “Based on Amount”
- Scroll down and click “Publish”.
This will automatically create Management Fee and respective Tax transactions in accounting and will charge your owner for the maintenance contribution and taxes.
For other recurring tax charges that are a percentage of a base amount (e.g. monthly rent or annual HOA fees), you have to calculate the tax amount and add a second line item to the base charge line item.
For the example of creating a recurring HST tax charge whenever you charge rent, go to:
- Manage → Lease Agreements
- Select a Property → Edit Lease
- Note the “Rent Amount” value.
- Scroll down, under “Additional Terms”, click “Add new line”
- Select your respective Tax account (e.g., “HST Taxes”)
- Calculate the amount based on the Rent Amount and the percentage of the applicable local tax.
- Scroll down and click “Publish”.
Now that you saved the additional line item, whenever Rent is being charged for that property, the respective amount of HST taxes is being charged as well.
Both rent and taxes are being shown on invoices and in the tenant portal and your books will be updated accordingly.
For one-time tax charges you also have to calculate the tax amount and add a second line item to the base charge line item.
For example, if you are charging a Business Partner a cleaning fee after they damaged something on your property,
Go to:
- Accounting → Transactions
- Click the “Add” button on the top right and select “Income”
- Enter/change “Income/Invoice Date”
- Select vendor under “Paid from”
- Select Property under “Property or Company” and “Unit” (if applicable)
- Select “Account” and enter “Amount”
To add HST Taxes (Canada example) to this line:
- Click the “Add new line”
- Select your respective Tax account (e.g., “HST Taxes”)
- Calculate the amount based on the Rent Amount and the percentage of the applicable local tax.
- Scroll down and click “Save”.
The business partner will see not only the cleaning fee but also the applicable HST tax on their invoice and your books will be updated accordingly.
Specifically for management fees, use Property Management Terms.
In sum...
You can use an auto calculation of the tax amount for Management Fees by using Property Management Terms.
Recurring charges require a one-time set up of an additional tax line item.
One-time charges require adding an additional tax line item every time you create such a charge.
Your local tax authority provides specific information on applicable tax rules and on rates.
Always review your accounting set up with a qualified tax professional.
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