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					GST Coding changes
CANADA REVENUE AGENCY’S GST RULES

The Canada Revenue Agency (CRA) has defined rules for GST that the University must
adhere to.

Where an educational institution is engaged in operational activities, a rebate of 67% of
GST paid can be claimed. The remaining 33% of GST paid is charged to the operational
unit. The exception is when the University purchases books for instructional/operational
purposes. In this case 100% of the GST can be claimed as a rebate.

Where an educational institution is engaged in commercial activities (e.g. selling goods for
profit – like the bookstore), 100% of the GST is recovered by claiming an Input Tax Credit
(ITC).

Operational Activity
Operational expenditures              Subject to rebate of 67% of GST; 33% charged to
                                      expense account
Books purchased for operational       100% of GST paid is rebated
purposes
Commercial Activity
Commercial activities                 100% ITC of GST paid is rebated (fully recovered)
Books purchased for resale            100% ITC of GST paid is rebated (fully recovered)


GST CODES AT THE UNIVERSITY

Effective October 2006 to coincide with the upgrade to version 8.9, the University changed
the method of recording GST on all expenditure (purchasing) transactions in the
PeopleSoft Financials application (e.g. accounts payable invoices, travel and expense
claims). The intent of these changes is to simplify processing GST on expenditure
transactions by having the system default the correct GST rebate for the vast majority of
transactions.

Financial Services evaluated each project ID and department ID to determine if the activity
relates to commercial or non-commercial (operational) activities. All new department and
project chart of account set up requests (with the exception of research grants) must
include information on the purpose of the new chartfields (commercial or non-commercial
activity).

             To change the GST defaults for a project or department, contact Financial
             Services.
When an expenditure transaction is entered, the first system evaluation is to determine if
the chartstring contains a Project ID. If yes, then it determines if that Project ID is
generally deemed as being for commercial or non-commercial (operational) activity. The
GST application is then determined and defaulted.

If the transaction is not coded to a Project ID, then the system looks at the department ID
(a mandatory chartfield) to determine if the activity is commercial or non-commercial.

VAT (GST) Code
There will be three default codes to denote the amount of GST applicable to the
transaction.

      •   For most expenditure transactions, 6% GST is applied.
      •   Gratuities are not subject to GST. Canada Revenue Agency allows calculating
          the GST at 5% of the TOTAL paid amount, including the gratuity. The University
          has elected to apply this ruling as opposed to using the GST calculated and
          displayed on the receipt. This rule must be applied consistently for all
          expenditure transactions where a gratuity is applied.

VAT Codes
GST            Calculates 6% GST
               Defaults rebate/ITC application to unit’s set up
GST_GRAT       Calculates 5% GST
               Defaults rebate/ITC application to unit’s set up
N              No tax charged by the supplier




             GST codes (A, B, C, TA, TC, HA and HC) in v8.4 are no longer used but may
             appear on transactions initiated in v8.4.
VAT Use Types
The VAT Use Type is used to determine the correct rebate amount. The system default is
MAPP (Mixed Apportionment) which automatically assigns a 67% rebate for projects or
departments with non-commercial activity and a 100% rebate for commercial activity.

VAT Use Types
MAPP             Mixed apportionment assigns either a 67% rebate or 100% ITC (or a
                 combination of both) depending on whether the project or department as
                 been classified as non-commercial (operational) or commercial,
                 respectively.
Book             100% book rebate (use for all book purchases and professional
                 subscriptions that are not purchased for resale)
ITC              100% input tax credit for commercial activity (override for operational units
                 who occasionally conduct commercial business or purchase items for
                 resale)

As noted earlier, the system will be configured to identify projects and departments with
either operational or commercial activity.

       •   If the activity is deemed non-commercial (operational), the MAPP use type will
           assign a 67% rebate.
       •   If the activity is deemed commercial, the MAPP use type will calculate a 100%
           ITC recovery.


Example GST Defaults
This example shows how the system determines GST coding.

                                         UNIT             System Interpretation
                                                              of GST Code

                                     Bookstore                 100% ITC
                                 (Commercial Dept ID)


           Default code:         Supply Mgmt Services
               GST                                             67% Rebate
                                 (Operational Dept ID)


                                Supply Mgmt Services –
                                     Trade Show                100% ITC
                                (Commercial Project ID)

       •   One VAT (GST) code is used: GST
       •   Three different system defaults based on evaluation of Project ID and
           Department ID.
       •   Notice how the commercial designation SMS Trade Show project ID trumps the
           non-commercial designation for the SMS operational department ID.
GST Exceptions
Exceptions to the default GST codes include:

      •   Book purchases should be flagged with the BOOK code to receive a 100% GST
          rebate.
      •   Likewise, if your project or department is deemed operational (subject to a 67%
          rebate) and you purchase goods for resale, flag the expenditure with the ITC
          code to receive a 100% input tax credit on the GST.

In these situations, record GST requirements or override on the expenditure transaction.

            The key thing to remember is that for most expenditure transactions, the correct
            GST coding will be determined by the system. For operational units to ensure
            they are not unnecessarily charged for GST non-recoverable amounts, they must
            ensure books and commercial purchases are overridden with the correct code.