more-arw search

Q&A Forum

treatment of non-deductible sales tax on monthly lease payment (capital lease)

getting back to basics here... I'm struggling and questioning myself because of all the mistakes I'm finding in the accounting for the company I'm currently at on mat leave coverage.

I'd like someone to confirm the following entry for the monthly lease payments for a capital lease of a vehicle

dr. vehicle lease liability
dr. deductible sales tax (GST here in Canada)
dr. admin expense re: Provincial Sales Tax (PST) portion of monthly payment
cr. cash

What I'm really interested in is the PST portion treatment... is the PST just expensed each month to auto expense or another G&A account? The PST portion of the lease was not financed and so it was not capitalized at the time of entering the capital lease.

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Since you are paying PST to the leasing company, and assuming you can't clawback the PST as an overpayment, then I would just aggregate it with the auto expense entry.

Sales taxes that a company pays, IMHO doesn't need its own account or KPI, it's just part of the expense.

If you have a clawback, that changes the answer.

352 views

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.