Dext helps ensure taxes on purchases are accurately sent to Xero, so you can correctly claim your input tax credits (ITCs).
This guide explains how to control tax calculation and publishing from Dext to Xero for Canadian businesses, with practical examples and recommendations for handling common receipt types.
Where to find your tax settings
You can manage your Xero tax integration settings in Dext by going to:
Business settings > Connections > Manage (next to Xero) > Settings > Tax
These settings control how tax rates and tax amounts are applied to receipts and sales items before they are published to Xero.
Publishing tax data to Xero
Dext provides three policies that control how tax amounts are published to Xero. Choosing the right option is essential for accurate GST/HST reporting.
Allow Xero to calculate
Xero ignores the tax amount extracted by Dext and recalculates tax using the default tax rate on the selected account or category.
Use this option only if:
The business does not claim ITCs
ITCs are claimed using a fixed percentage
The Quick Method for GST/HST is used
Allow Dext to decide
Dext always sends the tax amount extracted from the receipt to Xero.
This is the recommended option for most Canadian businesses, as it preserves the actual tax charged.
Allow Dext to decide with exceptions
Dext sends the extracted tax amount to Xero, except in the following situations:
If no tax amount is extracted, Xero calculates tax using the default tax rate on the category.
If the default tax rate on the category is 0%, Xero ignores the extracted tax amount and publishes no tax.
This option is not recommended, as it can result in incorrect or missing ITCs.
Xero category tax default behaviour
This setting controls which tax code Dext applies when a receipt or sales item does not already have a tax rate assigned.
It determines whether Dext uses its own default tax codes or the tax code set on the category in Xero.
Always use Dext default tax codes
Dext always applies the default tax codes selected in the tax settings, even if the Xero category has a tax code.
Use this if you want tax behaviour to be controlled entirely from Dext.
Always use category tax code from Xero if applicable
Dext applies the tax code set on the Xero category, if one exists.
If the category has no tax code, Dext falls back to the default tax codes set in the tax settings.
Use Dext default tax codes when category is ‘No tax’
Dext uses the category tax code unless the category is set to No tax.
If the category is No tax, Dext applies the default tax codes from the tax settings.
Use tax list
When this setting is turned on, Dext shows a Tax dropdown on the receipt detail page.
The dropdown displays all tax rates set up in your Xero account.
Applying a tax rate to a receipt controls the tax amount and overrides the default Publishing tax data behaviour.
Enabling this setting also allows tax rates to be used as supplier rules.
Tip: Keep this enabled so you can correct tax when the default category rate does not match the receipt.
Use supplier tax rates
When enabled, Dext applies tax rates from Xero suppliers automatically.
Tax rates applied to suppliers in Xero are brought into Dext and saved as supplier rules.
Supplier tax rules override the tax amount extracted from receipts.
You can still change this on an individual receipt by selecting Extracted amount.
Tip: Use this for suppliers that consistently charge the same tax rate.
Default tax settings
Default tax settings act as fallback tax codes. They are only used when no tax rate exists on the receipt, item, or category.
These settings do not change how tax is calculated. They only control which tax code is attached when publishing to Xero.
Note: All default tax rates are automatically set during the Xero integration. You may need to update them if your Xero account uses non-standard or custom tax codes.
Default tax for costs
The tax code applied to cost items when:
No tax rate is selected on the receipt, and
No tax rate exists on the item or category in Xero
Default tax for tax-exempt costs
The tax code applied to cost items treated as tax exempt when no other tax rate is available.
Default tax for sales
The tax code applied to sales items when:
No tax rate is selected, and
No tax rate exists on the item or category in Xero
Default tax for tax-exempt sales
The tax code applied to tax-exempt sales items when no other tax rate is available.
How default tax rates affect publishing
Even when a default tax rate is selected in the tax settings:
Dext sends the tax amount extracted from the receipt
The selected default tax rate is attached to that amount
This applies unless:
A supplier tax rule is set, or
A tax rate is manually selected on the receipt
In those cases, the supplier or manually selected tax rate takes priority.
Publishing receipts with tax
Dext usually extracts the correct GST/HST amount automatically.
Using extracted amount
If the category’s default tax rate matches the receipt, leave Extracted amount selected. The receipt will publish correctly to Xero.
Selecting a tax rate
If the receipt tax does not match the category’s default tax rate, select the correct tax rate from the Tax dropdown.
This prevents tax being split incorrectly in Xero.
Receipts with non-Canadian tax
Foreign taxes such as US state tax or European VAT cannot be claimed as ITCs on a Canadian return.
To prevent these taxes being sent to Xero:
Select a 0% tax rate on the receipt, or
Use supplier tax rates with a default 0% rate
Tax-inclusive receipts
Some receipts include tax in the total without showing it separately (for example, parking or taxi receipts).
To record tax correctly, you can:
Manually select the correct tax rate
Use supplier tax rates
Manually enter the tax amount while keeping Extracted amount selected (only if the category’s default tax rate matches the receipt)
Receipts with tips (meals and entertainment)
Only 50% of GST/HST on meals and entertainment (M&E) is claimable as an ITC.
Create dedicated M&E tax rates in Xero to make reporting easier.
You can either:
Use Extracted amount when the category tax rate matches the receipt, or
Use Edit line items to split the meal and tip into separate lines, applying tax only to the meal
Receipts for import taxes
Bills with GST/HST only
Select Sales tax on imports as the tax rate
Select your GST/HST liability account as the category
Bills with GST/HST and other charges
Select a 0% tax rate on the receipt
Use Edit line items to split the charges:
Duty or fees: 0% tax rate, expense category
GST/HST: Sales tax on imports, GST/HST liability account
Appendix: Canadian tax rate setup in Xero
Standard purchase tax rates
Alberta and territories: GST 5%
British Columbia: GST 5% + PST 7%
Manitoba: GST 5% + RST 8%
Saskatchewan: GST 5% + PST 5%
Quebec: GST 5% + QST 9.975%
Ontario, New Brunswick, Newfoundland and Labrador: HST 13%
Nova Scotia: HST 15%
Prince Edward Island: HST 14%
GST-only rates for ITCs
If you are not registered for provincial sales tax:
British Columbia: GST 4.6729%
Manitoba: GST 4.6296%
Saskatchewan: GST 4.7619%
Quebec: GST 4.5465%