If you are entitled to a rebate or an input tax credit (ITC), deduct the amount of the rebate or ITC from your total purchase cost, and record it as an asset (GST receivable) on the balance sheet. The amount to record under operating expenses should be the net cost to you.

For example, if you are entitled to claim a rebate of 100% of the GST:

Your total purchase is $107
$7 is the GST
Record $100 in operating expenses
Record $7 as a GST receivable

If you are entitled to claim a 50% rebate:

Record $103.50 in operating expenses
Record $3.50 as a GST receivable

Revenues

The amount of GST you charge should not be recorded as part of your revenues. Record this amount as a payable (GST payable) on the balance sheet. For example:

You have taxable revenues of $200
$14 is the GST you must charge
$214 is the total amount you collect
$14 should be recorded as GST payable
Record the net $200 as revenue on the income statement

See chapter four of the GST Guide for more on GST accounting.

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