Tax Management Surveys

(Organizations Using Advataxes)

Key Points

Advataxes is software that has been specifically designed to properly manage GST/HST & QST recovery on employees’ expenses; recovery is optimal. Under the surveys conducted, the difference between input tax claimed and input tax that should have been claimed is just over 1%. What is significant is that the expense reports were filled out mainly by marketing, production and administrative employees who incurred expenses across the country and elsewhere, thus a total of 5 different tax zones.



One of Advataxes' strengths is that the province must be selected for each expense by employees which is a key factor for this rate of success. It's a much more effective process than asking them to look at a list of different tax codes, understand the tax rules for each of these codes, and select them. Also, the transaction date is taken into account for tax automation purposes. This is effective for tax rate and tax rule changes, such as the phasing out for the QST regime of the restricted ITRs over several years.


Some might wonder how meaningful it is to have a proper tax management for these type of expenditures? It should be noted that with the gradual elimination in QST of the restricted input tax refunds for large businesses, the amounts of taxes to claim will be more and more important; it is therefore a growing economic issue.


GST/HST & QST Performance


• Completed by 48 employees of companies with a "large business" profile for GST/HST and QST purposes
• Sampling of 781 expenses totaling $ 89,448.57
• Expenditures incurred in Newfoundland, Nova Scotia, New Brunswick, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia and outside Canada

Methodology

The work consisted of analyzing about 800 expenditures contained in employees expense reports, incurred in Canada and outside Canada. The taxes to be claimed cover 5 different tax zones; Atlantic provinces with a 15% HST, Quebec with a 5% GST and a 9.975% QST, Ontario with a 13% HST, Western Canada with a 5% GST. Finally, there are expenditures of suppliers outside Canada that are by and large not subject to the GST, the HST or the QST.


In all cases, these are expenses incurred by companies with a "large business" profile for GST, HST and QST purposes. In the columns entitled "GST / HST to be claimed" and "QST to be claimed" these totals take into consideration that for reimbursement of expenses, copies of invoices are found.


Analysis

The difference between the "GST/HST on invoices/allowances" column and the "GST / HST to be claimed" column is due primarily to the 50% restriction on meals and entertainment. The difference between the column "QST on invoices/ allowances" and the column "QST to be claimed" is mainly due to the restriction on input tax refund that is in effect until January 1, 2021. The loss of ITCs and ITRs due to lack of invoices/vouchers is very low. During training sessions with employees, the emphasis was placed on explaining software features and the importance of keeping supporting documents.


In short, if we analyze the gap between claimed input tax and input tax that should have been claimed, it’s a difference of just over 1% in terms of amount.