Managing HST Receivable and Payable
This guide explains how to handle Harmonized Sales Tax (HST) in scenarios where HST payable to the government exceeds HST receivable (i.e., you always owe the government at the end of a quarter).
Key Concepts
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HST Payable: The HST you collect from tenants/rentals (a liability owed to the government).
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HST Receivable: The HST you pay on property-related expenses (a credit the government owes you).
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Net HST Payable: The final amount you owe the government after adjusting HST receivable against HST payable.
Quarterly HST Adjustment Process
At the end of each quarter, you’ll adjust the HST accounts to calculate your net obligation.
Example (March 2025):
Before Adjustment
| Account | Balance Type | Amount |
|---|---|---|
| HST Payable | Credit | $5,000 |
| HST Receivable | Debit | $1,000 |
| Net HST Payable | Credit | $4,000 |
Adjustment Journal Entry
Debit HST Receivable: $1,000
Credit HST Payable: $1,000
After Adjustment
| Account | Balance Type | Amount |
|---|---|---|
| HST Payable | Credit | $4,000 |
| HST Receivable | Debit | $0 |
This adjustment cancels out the receivable, leaving $4,000 owed to the government.
Paying the Government
You can pay the full $4,000 or a partial amount.
Scenario: Partial Payment ($1,000)
Payment Journal Entry
Debit HST Payable: $1,000
Credit Bank: $1,000
After Payment
| Account | Balance Type | Amount |
|---|---|---|
| HST Payable | Credit | $3,000 |
| HST Receivable | Debit | $0 |
The remaining $3,000 will carry forward to the next quarter.