When you write-off an invoice in which GST/HST is applied, the total amount of the invoice is debited to the Bad Debt account. However, the tax liability does not get reduced in the GST/HST Return.
In Zoho Books, you can directly adjust the tax amount in Line 103 / Line 104 / Line 107 to reclaim tax on written-off invoices.
You can make adjustments only when the HST/GST Return is in draft status. No adjustments can be made after the Return has been filed.
Let’s say, you write-off an invoice in the same tax period, in which the tax collected for the invoice is liable to be paid to the Canada Revenue Agency. Then, you can directly adjust (reduce) the Line 103 amount. Please follow the steps mentioned below to adjust (reduce) the Line 103 amount in GST/HST Return:
If you write-off an invoice after the tax for the invoice has been reported to the Canada Revenue Agency, you need to adjust the Line 107 amount in GST/HST Return for the current tax period. Please follow the steps mentioned below to adjust the Line 107 amount in GST/HST Return:
Now, check your reports and the Bad Debt account will be credited and the Tax Payable account will be debited.
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