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About Reporting Tax on Retainage

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Usually, Sage 300 reports tax by posting tax amounts to tax accounts and updating tax tracking reports when you post invoices, credit notes, and debit notes.

Typically, tax amounts are posted to tax accounts as follows:

Tax recoverable or tax expense accounts are used for taxes that apply to Accounts Payable documents.
Tax liability accounts are used for Accounts Receivable.

However, the timing of your liability (or expense) for tax on retainage depends on the tax authority. Some authorities expect you to report tax when you post a retainage document; others let you report tax when you post an original document to which retainage applies.