Received materials from overseas but there is no tax charged. Which tax category should I select? 0 rated, exempt or out of scope.

Hello aniz-premiuminno,

This is a great question. Working with situations where sales tax doesn't apply can be tricky, and with there being three codes available for QuickBooks Online, I can appreciate wanting to verify which you should use. I can give you some guidance for this situation.

Ultimately, knowing which sales tax codes to choose is something I recommend confirming with an accountant, but I can shed some insight on what each code means so you can have a better sense of how to work with them. I'll start with the Out of Scope sales tax code.

The Out of Scope sales tax code is often used for situations where Canadian sales tax rates and codes don't apply. This may in fact work for your situation if your purchase was to an overseas supplier that doesn't use our tax codes.

The Exempt and Zero rated sales tax codes depend largely on things like ITCs. I've found a handy article from a small business blogger that explains the difference between the two of them, which you can read here: GST/HST Exempt and Zero-Rated Goods and Services in Canada

I also recommend resources like the CRA website and their tax tips line to ensure you have the most accurate information. Here are a couple more links for you.

• General Information for GST/HST Registrants

• Tax Information Phone Service (TIPS)

Finally, an accountant is a great resource to have for any business owner. They're trained to know the ins and outs of balancing books and making sure you're recording entries properly. At QuickBooks, we know the importance of this relationship, which is why we've included the My Accountant tab right in QuickBooks Online. This gives you the chance to invite your accountant on as a user to help you right in the program, or you can use the Find a pro to help button to research experts near you.

I hope that this has been helpful. Enjoy your week. :)