Tax Maintenance Overview

General Ledger Overview Information Guide -> Tax Maintenance Overview

Texada SRM provides a choice of three tax calculation solutions as defined in the Company Taxing Parameters.

  1. Standard taxing which supports two tax codes simultaneously. This is most useful in Canada where both GST & PST can apply to the same purchase.
  2. If more than two tax codes are required simultaneously, this can be achieved with the Enhanced tax processing.

  3. For more complicated tax laws based on multiple tax combinations according to your store location and the customer Shipping or Billing address, an independent tax software package called Vertex can be employed.
    All tax rates, remittance reporting, and exemptions, are then maintained by Vertex software.
    Vertex tax connection access can be setup in the Company Taxing Parameters in the Vertex Connection Information window.

The different rules applying to these three tax options are:
  • RULES for determining Standard taxes:
  • The tax codes default first from the Site file.
  • If there is no site or no tax codes for the site on the document, taxes default from the "Ship To City" on the document. City tax records can be setup in City Tax Codes from the CITY TAX CODES button on Tax Codes.
  • If there is no "Ship To City" tax information, the taxes default from the Customer or the Division, according to the flag in Divisions.

Note: The Tax Code NTX over-rides any other code at any level.

Changes made to either Standard Tax Code 1 or 2 on the header, details, services, or damage waiver of counter documents including Contracts, Quotes, Reservations and Invoices, are written to the Audit Log and can be viewed under the "DOCUMENT TAX CODES" category.

The Tax Change Utility can be used to globally update tax codes in the tables and documents, by province.
e.g. GST to HST

The purpose of this more advanced tax feature is to allow more than two tax codes to be charged and tracked on products, services, and Damage Waivers, according to location, and to allow for tax exemptions on any or all of these charges.

There are two approaches to enhanced taxing.

  1. Use GEOCodes to determine Tax codes, where GEOCodes represent a geographic location as setup in Tax Codes By GEOCode.
    • RULES for determining which GEOCode applies for Advanced taxes:
    • A GEOCode becomes mandatory on each document, when any GEOCode exists in the system.
    • The GEOCode associated with the Site on the document applies first.
    • If there is no GEOCode for the Site then the Customer GEOCode applies.
    • If neither Site nor Customer has a GEOCode, then the document Division GEOCode applies.
    • If none of Site, Customer, Division has a GEOCode, a GEOCode Search window is provided on the document header to search and select one.
    If no valid taxes are defined for the GEOCode assigned to the document, then taxes are selected according to "Without GEOCodes" rules.

    Note: GEOCodes do not have to be used when using Enhanced Tax processing, but once even one GEOCode is created anywhere in the system, then they do become mandatory on all documents.

  2. Use Enhanced taxing "Without GEOCodes".
    • RULES for determining Advanced taxes without GEOCodes:
    • The taxes default from the Ship To City on the document.
      City tax records can be setup in City Tax Codes.
    • If there are no Ship To City taxes, the taxes default according to Tax Codes By Postal/Zip.
      A match for the exact Postal/Zip over-rides any match in which the Postal/Zip code fits into a range.
      If no exact match is found and the Postal/Zip code does not fall into a range either, then the blank Postal/Zip code range applies.
Forced Taxes by Product:
Additional taxes can be assigned to be charged on specific products, that respect Site, Customer and Division exemptions, but do NOT respect Class exemptions, as outlined in Tax Code Overrides By Product.

Tax Ceiling:
A limit can be set on the Taxable Amount of a single document for which individual taxes can be calculated.
This optional ceiling can be determined for each tax in the expanded record of Tax Codes, with a start date, and based on Sales, Rentals, Services, and/or Over All.
For example a specific tax can be charged on the first $500.00 rental and then any further rentals on that document would be exempt from that tax.
This tax ceiling is applied separately on each individual document.

When the Enhanced Tax processing is activated in the Company Taxing Parameters, the maintenance utilities can be accessed by clicking on the ADVANCED button at the bottom of Tax Codes, as outlined in the Enhanced Taxing.

Vertex Tax processing can be activated from the Company Taxing Parameters, in which case neither of the tax rules cited above apply.
Vertex can be used to combine multiple tax combinations based on the store location and the customer Shipping or Billing address as determined in the Vertex Connection Information.
The address information is validated against the Vertex database to determine the appropriate taxes. If the address validation fails (e.g. ZIP code does not match the city or state) a Vertex error is triggered and the address information must be corrected.
Also if a partial address is entered on a document that is to general and is insufficient to determine the tax area, a Vertex error is triggered requesting more specific address information.

All Tax Rates, Remittance reporting and Customer or Product Exemptions, are maintain within the Vertex Software.

Vertex Setup:
Tax Codes - requires only 2 codes:
  • Y (Yes) for taxable
  • NTX (No Tax) for exempt as all taxes are included in the Tax 1 value.

Then set up the two tax code fields in:

  • Divisions
    Sites (optional)
  • TAX 1 - With Vertex software this tax code is always interpreted as Y regardless of what is displayed.

  • TAX 2 - With Vertex software the second tax code is always interpreted as NTX because the second tax field is not used.

When Vertex taxing is turned on in the Company Taxing Parameters, Tax Code 1 on customers, documents etc. is set to 'Y' for taxable, and Tax Code 2 is set to 'NTX'.
Any customer, class, and service code exemptions are maintained in Vertex.
All tax reporting is done via Vertex.

Vertex / SRM Flow:
During all stages of processing EXCEPT Daily Close 2, SRM software send the quotation requests to Vertex, and during Daily Close 2 when the invoice is posted, an invoice request is sent to Vertex because the invoice is now finalized.

For all documents SRM sends the city, prov/state, and postal/zip codes to Vertex for tax determination.
Invoices will take original contract source and destination into account when submitting to Vertex.

Note: SRM Software only supports the Vertex 'O' series server, which uses xml and soap interfaces for communication.

Tunable Security Controls for Standard and Enhanced Tax Methods:

Topic Keyword: GL36
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