Steps:
Customers in Canada must pay a Federal Tax of 7% and a compounded local tax of 7.5%. To create a compounded tax scheme, the federal tax and local tax component must be set up.
Step 1: Setup tax components
| Tax Component 1: | 7.5% tax on goods and services |
|---|---|
| Tax Information: | |
| Tax Code: | Quebec - Goods and Services Tax |
| Tax Description: | Quebec - Goods and Services Tax |
| Account Code Description: | Sales Tax or another payable account code |
| Tax ID Number: (optional) | |
| Country: | Canada |
| Tax Based On: | Percent of Sales/Purchases |
| Decimal Round Up: (optional) | 2 |
|
Apply On: |
Extended Price |
| Computation Rules: | |
| Percentage of Goods and Services: | 100% |
| Minimum taxable amount: | 0 |
| Maximum taxable amount: | 99,999,999 |
| Percentage of Tax/VAT to apply: (e) | |
| a. Flat Rate: | 7.00% |
| b. Postal Rate: | Tax Rate from postal code. See Also: System Setup > Postal Codes |
| Minimum Taxable Amount: | 0 |
| Maximum Taxable Amount: | 99,999,999 |
| Tax Component 2: | 7.5% local tax component |
|---|---|
| Tax Information: | |
| Tax Code: | Provincial Tax - Quebec |
| Tax Description: | Provincial Tax - Quebec |
| Account Code Description: | Sales Tax or another payable account code |
| Tax ID Number: (optional) | |
| Country: | Canada |
| Tax Based On: | Percent of Sales/Purchases |
| Decimal Round Up: (optional) | 2 |
|
Apply On: |
Extended Price |
| Computation Rules: | |
| Percentage of Goods and Services: | 100% |
| Minimum taxable amount: | 0 |
| Maximum taxable amount: | 99,999,999 |
| Percentage of Tax/VAT to apply: (e) | |
| a. Flat Rate: | 7.5% |
| b. Postal Rate: | Tax Rate from postal code. See Also: System Setup > Postal Codes |
| Minimum Taxable Amount: | 0 |
| Maximum Taxable Amount: | 99,999,999 |
Step 2 - Setup tax scheme
| Tax Scheme: | Kentucky State Excise Tax on Diesel Fuel |
|---|---|
| Tax Information: | |
| Tax Code: | Quebec Provincial Tax |
| Tax Description: | Quebec Provincial Tax |
| Country: | Canada |
| Tax Type: | Sales |
| EC Goods and Service: | NA |
| EC Sales or Purchase: | NA |
| EC Notional Rate: | NA |
| Tax Components: | |
| Selected Tax/VAT Component: | Quebec Provincial Tax |
So that:
Extended Price: CAD $200
Rate from tax component:
1. Goods and Services Tax: 7%
2. Local Tax: 7.5%
CAD $200 X 7.00% (GST) = CAD $14.00
CAD $200 + CAD $14.00 = CAD $214.00
CAD $214.00 X 7.5% (Local Tax) = CAD $16.05
CAD $214.00 + CAD $16.05 = CAD $230.05
Next Steps:
-
Assign default sales or purchase tax. See Also: Customer Class Templates | Customers Ship To Class Templates | Supplier Class Templates
-
Maintain sales or purchase tax. See Also: Other Tax Options