Re: [Web-erp-developers] Re: [Web-erp-users] tax rates...

[skaill <sk...@ro...>]

We do need more tax functionality. I have discussed this situation somewhat
in the past and it is on the tax development document (summary) I created
and distributed here.  It is also on my to do list but there is someone else
who is working substantially on taxes and I am waiting to see where they get
to first.  I have possibly not brought this issue to the forefront though.

This is actually not a unique situation to Canada.  There are so many taxes
that can exist at the municipal, provincial/state, federal and even industry
level.  For instance there are taxes that apply to excise,
expense/capitalize, even food as opposed to munchies differences in tax and
special housing industry taxes.   Some of these taxes in various places and
situations end up taxed on the tax.  In Canada there is one general taxation
requirement that some others don't have and that is the customer must see
each tax separately.  Still, if you need to submit to different authorities
then you must calculate separately at some point anyway.  In other words
these taxes MUST be calculated separately at some point and, for Canada and
some others, shown separately on the customer invoice.  Rounding must be
properly handled as well but I've dealt with and have all the specs for that
as well.

Basically, many companies find they must do tax modifications to their base
ERP software.  For example, a huge world-wide ERP software that I worked on
either did not do or did incorrectly (hence useless) many of the above
mentioned including tax on tax until I entirely redid the tax code for North
America 2-3 years ago.  It was widely used for many years before the tax
changes but each company was doing a manual solution or modifying the
product somewhat to do as much as they needed.

One workable approach for the interim is that which you are discussing where
the PST is a separate "item".  That tax item amount must be calculated after
the rest of the invoice has been completed.  You might want to put some kind
of check/reminder in the posting saying "Hey, did you calculate the PST" or
even an automated check...

To provide automated tax on tax functionality you must provide:

1) A way to stipulate the ordering of the taxes.  In other words QST
calculated before GST.
2) Variations must be selectable.  I.E. Sometimes items in Ontario have only
GST (food) and others have GST and PST (a chocolate bar).  In other words
variations and combinations of the various levels of taxation.
3) An order (or hierarchy) does not in itself specify which taxes actually
do tax on tax.  So somewhere you need to be able to specify which do tax on
tax.  In Canada's case, you would specify that QST (Quebec) does tax on tax.

There are two factors that influence the variation/combination of taxes.
First is the customer.  This has mostly, if not all, to do with their
shipping address and whether your company has an "office" within the tax
authority jurisdiction.  The customer could be aboriginal and exempt from
GST too!  Secondly is the item.  Some are PST and GST, others only GST and
some could be industry plus the other taxes.

Here's another interesting one...some places have tax authorities that don't
even bother to tax when the subtotal is under a certain amount!

The tax functionality I describe above and in the document better handles
everything most need within North America and elsewhere except VAT.  VAT is
a different animal better handled by someone more knowledgeable in that
area.

Steve

----- Original Message ----- 
From: "Phil Daintree" <we...@pa...>
To: <web...@li...>
Cc: <web...@li...>
Sent: Monday, October 04, 2004 5:02 AM
Subject: [Web-erp-developers] Re: [Web-erp-users] tax rates...


> In short webERP doesn't appear to cope with the multiple tax requirements
on
> one invoice. A different rate of tax can apply to every line on the
invoice
> and freight can have a different rate again, but two different taxes on
the
> same invoice - no can do as things stand.
>
> Your idea to have a dummy item that charges the first level of tax with a
> description of tax @ 7% where the tax is calculated manually. You could
make
> a separate product category with general ledger posting set up to credit a
> PST account in the general ledger instead of sales. GST would then
calculate
> on the total of the line items including the PST.  I may have PST and GST
> round the wrong way - but you see what I mean.
>
> It sounds as though we really need yet another layer of abstraction to
handle
> multiple taxes. This would need a whole lot of thought to figure out how
to
> do.  I thought Steve Kaill was Canadian and would have brought this to my
> attention before now. I would like the system to work for Canada but it
does
> seem as though it is not entirerly suitable.
>
> Phil
>
>
> > >>
> > >> I could easily charge the combined rate.  I have thought of that.
> > >> But, on the invoice, can I program in something to show the
> > >> equivalent of each tax paid?  I will need this for my
> > >> monthly/quarterly tax reports.  It will also be needed for the client
> > >> when they deal with their taxes. I have received bills like that from
> > >> my suppliers actually. The main bill shows the combined rate, and the
> > >> to the list, under the list of products and services sold.
> > >>
> > >> I talked to my friend about it, and he came up with a potential
> > >> solution. After we have the subtotal, can we create a service charge
> > >> and this would be the first tax (7% of the subtotal), and then when
> > >> the programmed tax (the one built into the software) comes along, it
> > >> would tax on top of the subtotal and first tax.
> > >>
> > >> Thanks
> > >>
> > >> Joseph
> > >>
> > >> On Oct 3, 2004, at 3:47 PM, Phil Daintree wrote:
> > >>> Is the tax paid to the same authority or do you have to pay PST
> > >>> separately to GST to different bodies?
> > >>>
> > >>> You could arrive at a combined rate easily enough say GST =10% and
> > >>> PST 5% PST charged on the GST inclusive amount
> > >>>
> > >>>
> > >>> so PST is 5% on 110% of the net ie 5.5% of the net. The combined
> > >>> rate is then 10% + 5.5% = 15.5%.
> > >>>
> > >>> Phil
> > >>>
> > >>>
> > >>> ----- Original Message ----- From: "Joseph Hogan"
> > >>> <ho...@tc...>
> > >>> To: <web...@li...>
> > >>> Sent: Sunday, October 03, 2004 3:28 PM
> > >>> Subject: Re: [Web-erp-users] tax rates...
> > >>>
> > >>>> On Oct 2, 2004, at 3:26 AM, Daintrees wrote:
> > >>>>> The manual has a fair bit on this.
> > >>>>> However, the rate is calculated based on the net amount of the
> > >>>>> invoice also
> > >>>>> only one rate of tax can apply to a given invoice line.
> > >>>>
> > >>>> I just reread you message.
> > >>>>
> > >>>> Do I underdstand correctly then that if here in Canada we have our
> > >>>> two taxes, that all of Canada will not be able to use this software
> > >>>> (except Alberta, since they have no PST.).  This surprises me,
> > >>>> since there is a canadian that was involved in the manual
> > >>>> preparation (I think that it was the manual ), and he/she woudl
> > >>>> know that places have different ways of calculating taxes.
> > >>>>
> > >>>> This one rate of tax is limiting, because I have seen more and more
> > >>>> cities levying their own municipal sales tax in certain parts of
> > >>>> town. This could make a possible 3 taxes being charged.
> > >>>>
> > >>>> Please correct me if I am wrong.  I hope I am, otherwise, I will
> > >>>> have to look for another piece of software.  I was getting used to
> > >>>> Web-erp, and its interface.
> > >>>>
> > >>>> Joseph
> > >>>>
> > >>>>
> > >>>
>
>
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