What is recoverable tax?
A tax is recoverable if you can deduct the tax you paid on your business purchases from the tax you collect from your customers.
When you buy something for your business, you pay tax on your purchase. You can deduct this tax from the tax you collect from your customers.
For example, if you collect $5 in tax from your own sales and pay $1 in tax on a purchase for your business, you would owe the government $4.
What is non-recoverable tax?
A tax is non-recoverable if you must remit the full amount you've collected from customers, regardless of what you may have paid on your business purchases.
When you buy something for your business and pay tax on your purchase, you cannot deduct any tax from the tax you collect from your customers.
For example, if you collect $5 in tax from your own sales and pay $1 in tax on a purchase for your business, you would owe the government the full $5.
Once you create a tax, you cannot change the recoverable or non-recoverable option. Learn how to add, edit or delete a sales tax.