Processing AP Invoices with HST/GST Tax

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The purpose of this article is to outline the Step-By-Step workflow to process HST and GST Tax and record the recoverable tax amounts in the General Ledger. This article also explains in detail how the HST functionality in Veracross works and how the resulting journal entries are formed.

The HST/GST configuration is an optional part of a Veracross Accounting Implementation, and is only required by international schools that have different tax reporting standards.


  1. Go to the Accounts Payable Homepage and click on Add an AP Invoice under the "Workflow" column.
  2. Fill in the AP Invoice Header only, which will include the following fields:
    1. Vendor - You can search and select the desired vendor by clicking on the spyglass icon in this field.
    2. Invoice Number - The Invoice Number of the Invoice being entered
    3. Description - A description of the invoice. This will automatically be applied to all the AP Items on the Invoice as well unless the AP Invoice Item description is populated. (Optional)
    4. Invoice Date - The Invoice Date of the Invoice. This field will automatically populate with today's date if left blank. (Optional) 
    5. Due Date - The Due Date of the Invoice. This field will automatically populate based on the "Standard Days to Pay" on the vendor record if left blank. (Optional)
  3. Once all AP Invoice Header information has been added, click the green Add AP Invoice Header button in the top righthand corner. At this time, all defaults from the vendor/GL Defaults will populate, including the AP GL Account and HST Tax Code (If Applicable).
  4. If the vendor does not have a default HST Tax Code, set one in the HST Tax Code field and click Update.
    1. The AP Invoice Header needs to have an HST Tax Code before AP Items are added, otherwise the tax rates and recovery codes will not be assigned. 
  5. Once the AP Invoice Header has an HST Tax Code, add in the AP Item(s) by clicking on the green Add Record button. The fields that need to be filled in on the AP Item are:
    1. Amount - This is the amount of the AP Item that will be DR (or CR if negative) to the GL Account specified. 
    2. DR GL Account - Pick any expense account in the list. 
    3. Once complete, click Update.
    4. It is easiest to put in one AP Item for $100 so that the journal entry is easier to read after the Invoice is posted. 
    5. Once the update button is hit, the system will automatically apply the Federal Tax Rate, Provincial Tax Rate, Federal Recovery Code and Provincial Recovery Code to the AP Item(s). These are also individually updatable if needed.
  6. After all AP Items have been entered, go to the Action Menu (Lightning Bolt) and run the action Create HST Tax. This will create an HST Tax AP Item with an amount that equals the total HST tax for all AP Items on the Invoice. This also reduces the HST Mismatch field, which is used to confirm that all eligible HST AP Items have a tax amount created for them.
  7. Go to the Action Menu (Lightning Bolt) and run the action Post Invoice, or use the Post AP Invoices action on the Accounts Payable Homepage.
  8. Proceed with the rest of the AP Workflow as normal.

Reading the Journal Entry and Understanding How the System Calculated It 

When the action Create HST Tax is run, it not only creates the HST Tax AP Item, but it also removes the HST Mismatch amount, which is used to ensure that all HST eligible AP Items have an HST Tax AP Item created to account for it. If the HST Mismatch is not 0, then the system will not allow that AP Invoice to be posted. The system also requires that HST Tax AP Items be created using the Create HST Tax action only, manually adding an HST Tax line will not satisfy the HST Mismatch. Also note that the DR GL Account of that HST Tax AP Item is automatically set to the GL Account specified on the HST Tax Code selected. 

Before Create HST Tax is run: (13% x $200 = $26 in expected HST Tax)

After Create HST Tax is run:

As mentioned in the above Step-By-Step for adding HST AP Invoices, the AP Items on the Invoice are assigned tax rates and recovery codes based on the HST Tax Code of the AP Invoice Header:

These can be manually changed if desired for each individual AP Item. Note that the system action to create the HST Tax AP Item does not get assigned tax rates or recovery codes since it already represents the tax for the invoice. 

If you click into an AP Invoice Item and navigate to the Current / Taxes tab, you will find all information on the Tax Rates and Recoverable Amounts, as well as the GL Accounts they will be applied to based on the HST Tax and Recovery Codes on the AP Invoice Item:

Please Note: The defaults for the Federal and Provincial Tax GL Accounts are always pulled from the Federal ONLY and Provincial ONLY HST Tax Codes as part of their hard-coding in the system, and both always populate regardless of whether there is Federal or Provincial Tax Amount. 

Keeping the above in mind and looking at the Journal Entry that resulted from posting the AP Invoice, we are able to see the completed process: