• From: Canada, BC, Chilliwack
  • Registered: 04/20/2010
  • Posts: 22

Topic: Partial Tax Exemption

We have two taxes:

1) Goods & Services Tax (GST) @ 5% (Federal Tax)
2) Provincial Sales Tax (PST) @ 7%

Our Tax Groups are set up as:

1) Both Taxes (GST & PST)
2) PST Exempt (GST only)
3) Tax Exempt (no taxes)

Freight is taxable by GST but not PST.

How can we set up the tax group 'Both Taxes' so that only GST is charged for freight. Right now we are using a band-aid solution by setting up freight as service add-ons and making them PST exempt.

Is there a better/more elegant solution?

  • Registered: 12/25/2007
  • Posts: 2,447

Re: Partial Tax Exemption

I'm not sure what you mean, but seems that you should set up 'PST exempt' group instead of 'Both taxes' for freight charge. When you set 'Tax Shipping' option to Yes for the second group you will have tax for 'Shipping charge' input right calculated.
Janusz

  • From: Canada, BC, Chilliwack
  • Registered: 04/20/2010
  • Posts: 22

Re: Partial Tax Exemption

I don't think I explained my question clearly, let me try to elaborate:

Situation

Anything local customers purchase must be charged BOTH taxes, excluding freight which is only charged one of the taxes. So, I need a system where freight only is "PST Exempt" and all line items are charged as "Both Taxes."

Example

Fictional Item 1 - $10.00 (both GST/PST are charged)
Freight - $5.00 (GST only)
Total = ($10.00 + 12%) + (5.00 + 5%) = $11.20 + $5.25 = $16.45

In other words, all freight is PST Exempt even though customers or individual line items are not.

How can I set this up?

Right now, I set up an "item" and set its item type to service and it's tax type to PST Exempt. I then charge freight as a line item and leave the freight charge blank.

4 Reply by rthor (edited by rthor 05/05/2010 07:58:53 pm)

  • From: Canada, BC, Chilliwack
  • Registered: 04/20/2010
  • Posts: 22

Re: Partial Tax Exemption

[edit]
I misunderstood what the tax shipping flag under 'Tax Groups' means. Perhaps a better description for the flag, like 'Tax to be applied to shipping' or  'tax applied to shipping' or even simply reversing the words to 'shipping tax' or 'freight tax' could be used in order to make it more self-explanatory?
[/edit]

  • Registered: 12/25/2007
  • Posts: 2,447

Re: Partial Tax Exemption

Thanks for pointing the naming problem out. I will fix the name in sources.
I guess after setting the right tax to be applied to freight all works right?
Janusz

6 Reply by rthor (edited by rthor 05/06/2010 02:54:03 pm)

  • From: Canada, BC, Chilliwack
  • Registered: 04/20/2010
  • Posts: 22

Re: Partial Tax Exemption

Yes, thank you Janusz!

[edit]
To help contribute to FA, I have taken the liberty to update the Wiki page for  Setup->Tax Groups. Please let me know if this is acceptable or if it should be updated.
[/edit]

  • From: Canada, QC, Montreal
  • Registered: 05/16/2010
  • Posts: 167

Re: Partial Tax Exemption

Yes, many thanks.