Procedure RG2002 - University Press - Processing the Canadian "Goods and Services Tax" (GST)
Policy Steward facilitating procedure: Dean, University Libraries
Table of Contents:
- AUDIT COORDINATION - FINANCIAL AND PROCEDURAL
- RECORD RETENTION, DISPOSITION AND DESTRUCTION
- CONTACT INFORMATION
- CROSS REFERENCES
In 1991, the Canadian government enacted a new Goods and Services tax on practically all goods and services sold in Canada by producers having over $30,000 in annual sales. The University Press, in compliance with the law, is taking steps to identify, remit, and collect this tax. (Note that the tax is on Sales, not Collections, so the Reports of Cash Receipts [except for prepaid subscriptions] will not suffice to report/remit this tax.) This procedure identifies the steps required to pay the tax. The present tax rate is 7% but is subject to change.
The University Press will invoice the respective buyers for all books sold by the Press to Canadian addresses. Because of the number of continuing repeat business of many of the Press customers (domestic and foreign sales), the Press has established a valid computerized accounts receivable system. As payments are collected and deposited, the Report of Cash Receipts will credit all income to the University Press Income Account, 02-031-36, Fund 3629, Object Code 030.
At the end of each calendar quarter, the Press will report via memo to Accounting Operations the amount of book sales to Canadian addresses (including postage). Accounting Operations will book the current GST rate on gross sales to the ledger account 0691, "Canadian GST Payable." The computation for the current tax rate is; gross sales X .06542 = GST payable. The Journal Voucher entry would be:
DR University Press Income 02-031-36 Fund 3629 $XXX
CR Canadian GST Payable 0691 $XXX
Quarterly, Accounting Operations will complete the Revenue Canada's "Goods and Services Tax Return for Registrants" form (Exhibit "A"), to report and remit to Revenue Canada the amount due them for Press sales into Canada. The Special Request for Check (SRC) transferring these taxes will charge "Canadian GST Payable 0691" for the amount accumulated in the account. This is payable in Canadian dollars.
The GST Quarterly reporting form provides for reversing (adjusting) the taxes due for returned merchandise and bad debts (after valid, documented attempts to collect the bad debts). These adjustments must also be reported by the Press via memo to Accounting Operations for appropriate inclusion in Quarterly reportings and Journal Voucher entries.
Since all Journal sales are prepaid, there are no accounts receivables. There are two prime agencies who handle many University Presses' journal sales to Canada (including Penn State's). Other agencies also handle subscriptions in much the same way that F. W. Faxon Company, and EBSCO do; that is they bill the subscriber (including the GST), collect the remittances and distribute the proceeds to Revenue Canada (7%); and to University Press, 90% of the subscription value (retaining their current 10% discount for services). The Press's summary reports must identify these "agency" sales so GST reporting, collecting, and remitting (by the agencies) will not be duplicated because of the way they are handled.
For those subscriptions sold to Canada directly from the Press (which will include the GST), the Report of Cash Receipts reporting collections will distribute the remittance as follows:
Canadian GST Payable Account 0691 (.06542 of the gross total) $XXX
Press Sub Sales 02-031-36 Fund 3629 Obj Code 030 (balance) $XXX
Quarterly, when Accounting Operations remits the GST to Revenue Canada, the Special Request for Check will include all GST due.
The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for working with Internal Audit when audits are being performed in the administrative area, as well as performing an annual audit that is submitted to the Assistant Controller.
Record retention must be managed in accordance with Policy AD35 - University Archives and Records Management, and records schedules approved by the Records Management Advisory Committee, Office of General Counsel, and Office of the President. These retention requirements are the University's retention criteria, either derived or based upon federal, state, and local statute or regulations, industry standards, and business needs. Retention beyond recommended time periods require justifiable reasons and warrant review by the Records Management Officer or designee. All documents must be maintained in such a manner so as to provide ease of access for review, and to provide a suitable audit trail for all transactions.
- Documents subject to a Legal Hold (see AD35, Legal Hold). A legal hold will remain in effect until it is released in writing by the Office of General Counsel.
- Documents under audit or review, either internally or externally. The retention period extends until released by the Corporate Controller's Office. The Financial Officer will be notified regarding any accounts which are under audit; the Financial Officer will be responsible for contacting the department.
Additional questions may be directed to the University Archivist or the Records Management Officer.
For questions, additional detail, or to request changes to this procedure, please contact the Director, University Press
- Policy AD22 - Health Insurance Portability and Accountability Act
- Policy AD35 - University Archives and Records Management
- Blue/White Shredding Program
Date Approved: 08/12/92
Most recent changes:
- Original - Dated 07/09/92
Revision History (and effective dates:)
- Original - Dated 07/09/92