Rebuilding a Chart of Accounts Without Losing Your Comparatives
A cutover walkthrough for rebuilding a chart of accounts: the mapping table, opening balances, restated comparatives, and the proofs that keep history intact.
RegionSales tax that stops in your accounts
British Columbia: a sales tax that never comes back
The provincial tax here does not flow through the way the federal one does. It stops in your accounts, and where it stops decides what your margins are telling you.
Most Canadian finance functions rest on one deep assumption about sales tax: that whatever you pay on your own purchases comes back. Under the federal tax it does, through input credits, which is why it can sit in a receivable and never touch a cost of goods figure or an asset balance. The provincial tax here does not work that way, and the province says so plainly: there are no input tax credits on goods a business buys. Relief comes before the fact, as an exemption, or it does not come at all. That structural difference is why a company opening an operation here and simply adding a tax code to its ledger will get its margins wrong, its fixed asset balances wrong and its inventory valuation wrong, quietly, and all in the same direction.
DetailWhat the finance function actually carries
Where the tax stops decides where it belongs. Provincial tax paid on a machine is part of what the machine cost, so it is capitalised with the asset and depreciated rather than expensed, and it changes the carrying value on the balance sheet. Provincial tax paid on supplies consumed in operations is an operating cost of the period. Provincial tax paid on something bought for resale should never have been paid, because that exemption is claimed up front by quoting your registration number to the supplier, and a company that pays it and then goes looking for a credit will not find one. There is a standing exemption for production machinery and equipment covering manufacturers, software developers, service providers and several resource industries, and it works the same way, claimed in advance, on the invoice. None of this is exotic. It is a second tax with a different mechanism sitting inside a chart of accounts designed around the first one.
On the sales side the province taxes categories a federally configured system will have no code for, including software, telecommunication services, legal services, online marketplace services, and services performed on taxable goods such as repair, maintenance, installation and assembly. Registration is a separate provincial account and the return is a separate provincial return, neither of them visible from the federal filing. A company with no physical presence here can still be required to register, but the trigger is not simply making a sale into the province. The province sets out scenarios whose conditions all have to be met together, covering where orders are accepted, where goods are delivered and whether persons in the province are solicited, with distinct scenarios for software and telecommunication services and for marketplace facilitators, and a floor below which provincial revenue does not raise the obligation at all. That is a determination to make deliberately and once, with your accountant, rather than a box somebody ticks.
The employer side is a separate set of obligations that arrives with the first employee rather than the first sale. The province levies its own employer health tax on payroll, administered provincially, with its own account and its own annual return, and instalments where the prior year's tax requires them rather than as a matter of course. Workplace insurance is its own board again, with its own registration and its own payroll reporting. Neither is withheld from anyone and neither is visible on a federal payroll account. Corporate income tax, by contrast, is administered federally in partnership with the province, so there is no separate provincial corporate return and no second provincial account number to carry: the provincial tax is computed on schedules inside the return you already file.
EngagementsWhat changes about the work
The same engagements, carrying something extra here.
01Implementing the Finance Stack
The tax code set has to separate a recoverable federal tax from an unrecoverable provincial one at the point of entry, because a system treating both as receivable produces a reconciliation that balances against nothing and an expense line understated all year.
02The Monthly Close, Run as a Service
Reconciling the provincial sales tax account is a different exercise from reconciling the federal one. There is no credit side to prove, so the test is that what was charged agrees to the sales it was charged on and that nothing recoverable was posted there by mistake.
03The Reporting Pack We Deliver Every Month
Gross margin on provincial sales has to carry the unrecoverable tax embedded in the inputs, or a service line here reads as more profitable than an identical one elsewhere for a reason that has nothing to do with how either was sold.
BoundaryWhat this firm does not do here
This firm does not decide whether a particular product or service is taxable here, does not determine whether an out-of-province seller has crossed into a registration obligation, and does not file the provincial return. Those are positions, they carry assessment risk, and they belong with your external accountant. What it does is build the ledger so the answer can be applied consistently: tax codes that separate recoverable federal tax from unrecoverable provincial tax at the point of entry, exemption certificates held against the supplier record rather than in somebody's inbox, and a capitalisation rule so provincial tax on an asset lands in the asset.
Everything here is finance operations: which registrations exist, which returns exist, where each one sits in the close, and who owns the step. Whether a particular filing position is correct is a question for the company's external accountant, and this firm routes it there rather than answering it. The two jobs are different and a company needs both.
KNA Group works from Ottawa and has no office, no staff and no phone line anywhere else. These pages are not a claim to be local to you. They describe what changes in a finance function when a company has people or an entity in a place, and the work is delivered remotely inside the ledger, bank and tools the company already uses.
FAQAsked by companies with people here
FAQ: British Columbia
Can we claim back the provincial sales tax we pay on our own purchases?
No. The province states it directly: there are no input tax credits on goods a business buys. Relief comes before the fact, as an exemption claimed by quoting your registration number to the supplier, or through the standing production machinery and equipment exemption for the industries it names. If you paid it and it was not exempt, it is a cost, and the only question left is which account it belongs in.
Where does the provincial tax we paid on a new machine actually go?
Into the cost of the machine. Because it is not recoverable it is part of what the asset cost you, so it is capitalised and depreciated with it rather than expensed in the month it was paid. The same logic runs through inventory and through anything consumed in operations. A ledger that dumps all provincial tax into one expense account understates its asset base and overstates a single period's costs at the same time.
We sell software from outside the province. Are we caught?
Possibly, and it is worth settling properly rather than guessing in either direction. The province publishes scenarios for out-of-province sellers, including one specific to software and telecommunication services, and the conditions inside a scenario all have to be met together rather than any one of them being enough on its own. There is also a floor of provincial revenue below which the obligation does not arise. That is a determination for your accountant, made once and documented, not a judgement to make invoice by invoice.
Does the employer health tax here work the same way as Ontario's?
Structurally similar and administratively separate, which is the part that matters if you have people in both. It is a provincial account with a provincial ministry, a provincial annual return, and instalments only where the prior year's tax requires them. Nothing about an Ontario registration reaches it and nothing on a federal payroll account will tell you whether it has been filed. Two provinces means two accounts to reconcile, not one account with a second line on it.
ReadThe working documents behind this
The Month-End Close Checklist, Grouped by Day and by Owner
The working month-end close calendar we run for incorporated Canadian companies: day-by-day tasks, named owners, tie-out evidence and a sign-off gate.
The Monthly Reporting Pack: What Gets Read First, and What to Cut
One monthly pack followed from the close lock to the reader's inbox: the order the pages go in, the page that leads, and the seven things we take out.
NextThe other regions
- Quebec. A second revenue authority, end to end.
- Ontario. Employer costs nobody withholds.
- Alberta. One reconciliation removed, one return added.
- Saskatchewan and Manitoba. The tax follows what you bought.
- Atlantic Canada. One return, and a rate the customer decides.
- More than one province. Where the obligations stop composing.
Find out where the unrecoverable tax went.
Bring a trial balance and a list of what you bought last year. The question is a narrow one: whether provincial tax you can never claim back landed in the accounts it belongs in, or in one expense line that has been quietly wrong since the day the operation opened.