Record a GST/HST refund from the CRA

A refund cheque from the CRA is not income. It settles a balance your books are already carrying, so it clears your sales-tax account instead of adding revenue. Booking it as revenue overstates your sales and inflates the profit you pay tax on.

A refund on a return you filed

1. Go to Ledger › Reports › Tax Summary and set the period picker to the filing period.
2. Click Mark as Filed. You can save the CRA confirmation number, and leaving the lock checkbox on prevents backdated changes to the period.
3. Marking it filed posts the remittance entry, which moves the period's collected tax and input tax credits into GST/HST Payable (net), account 2110. In a refund position that leaves a receivable sitting there.
4. The green Filed banner now shows, with an amber "GST/HST unpaid" pill. Click Record payment / refund at the right of that banner.
5. The dialog opens on "refund" automatically when the period's net is negative. Enter the amount and the date the money hit your bank.

The entry posted is a debit to your bank and a credit to 2110, which clears the receivable. The same button sits on every row of Filing History if the period was filed a while ago.

An overpayment with no return behind it

Sometimes the cheque is not a refund on a return at all: an instalment overshoot, a double remittance, or a reassessment in your favour. Your payment already pushed 2110 past zero, so there is no filing period to record it against.

Post it by hand instead. Go to Ledger › Accounting › Journal Entries, click New Entry, and debit your bank account with an offsetting credit to GST/HST Payable (net). That clears the balance the over-remittance left behind.

Do not categorize the deposit

If the cheque also arrived on a bank statement or bank feed, match or dismiss that line. Do not code it to a category.

Bank categorization deliberately offers expense accounts, capital assets, owner and shareholder accounts, and prepaid balances. It does not offer the sales-tax accounts, so you will not find 2110 in the list. Worse, a number the category resolver does not accept falls back silently and the deposit ends up credited to revenue, which is the exact error this article exists to prevent.

Interest and offsets

Two things make the cheque a different size from the refund, and neither is handled by the flow above:

• The CRA paid you interest. The refund portion clears 2110; the interest is income and belongs in an interest income account. Split it across two lines in a manual entry.
• The CRA kept part of it. They routinely net a GST refund against payroll or corporate tax arrears. A smaller cheque is not a write-off, it is a payment against that other liability, and it needs its own line.

TALISK_HQ produces the figure and the worksheet. Whether a refund is correct, and how a reassessment should be treated, is a question for your accountant.