Tax setup for Canada

[pwickert]

How can I setup taxes rules for canadian provinces? Indeed for each of them we have a Federal and a Provincial taxes (with different %). I would like to have a line for each of them on the invoice. Is it possible ? I did create two different rules for Ontario and only one is showing up . Thank you

 

Pascal

[KayoteX]

Looks like this is very old problem.

And no one didn't have an answer how do it...

I need it too, but it looks like you can add only 1 rule for taxes

[scorpion]

WHMCS Documentation

- Setting up tax rules states "You can setup an unlimited number of tax rules."

[Matt]

Yes, you can setup multiple tax rules, but a client can only apply to 1. How do other systems handle this?

 

Matt

[scorpion]

I am not an accountant or tax collector for Canada.

 

Briefly in Canada we have the following taxes (Canadians please consult your accountant):

Harmonized Sales Tax (HST - currently 13%) for the provinces of Nova Scotia, New Brunswick, Newfoundland and Labrador

 

Goods and Services Tax (GST - currently 5%) for the rest of the country.

Provincial Sales Tax (PST, Quebec is called QST) for the rest of the provinces except Alberta

 

The three territories of Canada (Yukon, Northwest Territories and Nunavut) do not have territorial sales taxes.

 

All goods and services delivered into the reserves are exempted from taxes.

 

HST = sales total multiply by HST rate

PST = sales total multiply by PST rate (for PEI, PST = (sales total + GST) multiply by PST rate)

QST = (sales total + GST) multiply by QST rate)

 

I think:

- product needs to be tagged if it is provincial taxable

- customer needs to tagged if they are taxable

 

For simplicity but not fully tax compliance,

WHMCS users setup tax rules for every province/state

WHMCS program to apply every tax rule that applies to the province/state of the client's address (if the client is tagged as taxable) and print each tax with its label on its invoice. Although not true for every province, tax = sales total multiply by tax rate in that rule.

 

WHMCS users to have a field to enter their Tax Registration Numbers

WHMCS program will print this Tax Registration of invoices that tax are collected.

 

These are just my thoughts, hope there are more contributions so that Matt can make WHMCS Canadian friendly which will also help Australians and New Zealanders (I think).

[lostmind]

First, where the Hosting company is located in Canada affects the taxes that must be collected.

 

Second, I believe the taxes should be tagged per customer, not per product.

 

For example, let's say the hosting company was a BC company like mine.

 

All of our Canadian clients, regardless of their province must pay Federal sales tax (GST).

 

All BC clients must pay both Federal and Provincial sales tax (GST and PST) - although some clients can be exempt if they are a company that is registered to collect PST as well.

 

Finally, international clients do not pay any tax.

 

So if a client is in BC and signs up, they are liable for both GST and PST. If they add a second product, regardless of what it is (well there are some exemptions but nothing that a hosting company would offer) then that second product is also taxed for both GST and PST.

 

If the client was in Ontario, they would be liable for only GST on their hosting.

 

That said, I think this should be fairly easy to implement into WHMCS. WHMCS already has federal tax built in - if country = <whatever> then tax at X%. Now just add a second tax with the check based on province, with a configurable rate again.

 

Both taxes need to be displayed on the Invoice and tracked separately as we do need to remit them separately and clients need to track it separately as well - as some clients can use the tax paid as a credit on their tax remittance.

 

So the invoice for a BC customer hosted at a BC host would look like:

 

Website hosting $10

Subtotal: $10

Tax (PST): $0.50

Tax (GST): $0.70

Total: $11.20

 

And a customer from Ontario hosted with a BC host would look like:

 

Website hosting $10

Subtotal: $10

Tax (GST): $0.70

Total: $10.70

 

Just as a note, I am not a tax lawyer or specialist of any sort, I've just been remitting my taxes for 7 or 8 years in this manner as I was instructed to do by my accountant. I realise every province has different rules but I believe it is fairly similar to what I've posted above.

[lostmind]

Bah, I flipped the tax rates... GST is 5% and PST is 7%. But no big deal, the premise is still sound I believe.

[KayoteX]

Yup.

We need to be able to do that.

Maybe, we can add next taxes rules:

 

2 for Quebec:

Like if client choose Quebec, he will pay all taxes added for Quebec.

 

If there is no his province in tax rules he will pay Applies to Any State (Canada) tax.

 

Got it?

[uberhost]

How can I setup taxes rules for canadian provinces? Indeed for each of them we have a Federal and a Provincial taxes (with different %). I would like to have a line for each of them on the invoice. Is it possible ? I did create two different rules for Ontario and only one is showing up . Thank you

 

Pascal

 

How does PayPal let one handle this?

[nielsenj]

Matt,

 

Most solutions handle taxes by having a table sorted by region. So a country code for a tax for that country then a region code for more specific taxes associated with only that state/province.

 

Depending on how complex the system is some will have order boxes to determine tax order (the order in which the taxes are applied in the case of sub-totaling) and amount of tax along with the tax abreviation. Basically the higher level tax is executed first then the sub-level regional taxes are executed applying their tax amount to either the original amount or the total of the original amount and country level taxes. An indefinate number of regional taxes could be applied in this way. Each tax calculation would add a line (tax abbr, % and amount) to the invoice.

 

Furthermore, there's usually a option in product groups to say if a specific tax is exempt or included in calculations.

 

For instance:

 

A scenario where there's a 10% country tax and a 5% provincal/state tax:

 

Package price: $100

Country Tax: $10

State: $5

Total: $115

 

 

A scenario where there's a 10% country tax and a 5% provincial/state tax applied to product and the country tax:

 

Package Price: $100

Country Tax: $10

Sub Total: $110

State Tax: (110x.05) $5.5

Total: $115.50

 

As for the selecting what taxes are applied to a product group, i only bring this up because here in BC, hosting and domains are non-tangible items so certain taxes are not charged for them. However, fees, service calls and tangible items would have atleast one tax, but possibly both taxes applied to the group.

 

Anyways, long story short MB is probably the most dynamic system for covering tax options. DLing a demo will show you how they did it but it doesn't cover taxing other levels of taxes (to my recollection) which is needed in many places.

 

I think i made it sound more confusing than it really is... if anything needs clarification LMK and i'll do my best!

 

Regards,

J

[Matt]

I think people have misunderstood what I was asking - sorry for not being clear!

 

Matt, Most solutions handle taxes by having a table sorted by region. So a country code for a tax for that country then a region code for more specific taxes associated with only that state/province.

Yes, that's how WHMCS does it.

 

Furthermore, there's usually a option in product groups to say if a specific tax is exempt or included in calculations.

Yes, WHMCS also has this option. Tax can be enabled per product and turned on/off for addons and domains.

 

What I was really asking was more the technical side. Say I apply to two tax rules, both 10%. Is that 10% on the subtotal, and then 10% of subtotal+the already added 10% or 10% of subtotal again. Ultimately I guess, is it the equivalent of 20% tax? Then a point you touch on, does one have to come before the other and how is that normally determined in the config.

 

Matt

[lostmind]

Hey Matt,

 

It's 10% of the subtotal x 2 in your example.

 

Or you can look at my example of the two taxes:

 

Webhosting $10

Subtotal: $10

PST (7%): $0.70

GST (5%): $0.50

Total: $11.20

[scorpion]

For simplicity:

 

All taxes should be calculated based on subtotal.

 

e.g.

GST = subtotal x GST rate

PST = subtotal x PST rate

subtotal + GST + PST = Invoice Total

 

or

tax1 = subtotal x tax1 rate

.......

taxn = subtotal x tacn rate

 

subtotal + tax1 + .... + taxn = Invoice Total

[evolver]

Just like to chime in here and say that in BC and I think most of Canada (you'll have to check) you don't charge PST on web hosting unless you provide a physical product with the hosting or say web design.

 

Also you don't have to charge GST unless you make 30K per year but might vary through the provinces.

 

http://www.sbr.gov.bc.ca/industry_specific/telecommunications/faq.htm#1

[KayoteX]

About QC Taxes:

 

The taxes are calculated as follows on a taxable item with a selling price of $100:

Selling price $100.00

GST ($100 x 5%) $5.00

QST ([$100 + $5] X 7.5%) $7.88

Total $112.88

 

http://www.revenu.gouv.qc.ca/eng/entreprise/taxes/tvq_tps/info.asp

[lostmind]

Well, in BC the rules vary from auditor to auditor.

 

We have to charge PST because we were audited and since our hosting accounts had email services as part of the hosting, they considered us a Telecommunications service or something and made us charge PST.

[evolver]

Well, in BC the rules vary from auditor to auditor.

 

We have to charge PST because we were audited and since our hosting accounts had email services as part of the hosting, they considered us a Telecommunications service or something and made us charge PST.

 

Well this might have changed but when I phone them about a year ago I was told that unless I'm providing email with an internet service then I charge PST if its just a web hosting account then you don't need to charge PST.

 

It even says so on the link I posted in my previous post

 

Do I charge PST on web hosting services I provide to my customers?

 

 

No. You do not charge PST when you provide web hosting services.

 

However, you may be bundling web hosting with a taxable telecommunication service, such as Internet access. If you separate the charges for the web hosting on your invoice, you charge PST only on the taxable portion (i.e. Internet access). If you charge a single price on your invoice, you charge PST on the fair market value of the taxable portion

(i.e. Internet access).

 

You could always just say Email is free with web hosting. So you charge your customer $0 +(PST) for the Email service and regular price with no PST for the web hosting.

[HSc]

What I was really asking was more the technical side. Say I apply to two tax rules, both 10%. Is that 10% on the subtotal, and then 10% of subtotal+the already added 10% or 10% of subtotal again. Ultimately I guess, is it the equivalent of 20% tax? Then a point you touch on, does one have to come before the other and how is that normally determined in the config.

 

Matt

 

Hi Matt,

 

If you want to see another cart that has done (imho) a good implementation of the Canadian tax system, check out X-Cart.

 

You can take an online demo of the back-end here.

 

I hope that helps.

 

Cheers,

Marc

[lostmind]

On the PST note, I did call PST for a ruling on the issue. If you are providing webhosting services and your clients have any form of access to email, the product becomes taxable product. If you were to offer email as a separate product, you could get away with charging no PST on the hosting product and PST on the email product. However, the email product has to have a value - in other words you can't get away with something like "buy a hosting account and get free email!". What the value of the email service should be is hard to say, PST said it had to be fair. I assume if you are ever audited that the Auditor will determine what is fair... usually meaning whatever you are charging is not enough and you have to pay a penalty (says the man who has been through 3 audits, once for GST, once for PST and once for Payroll).

 

A little offtopic, sorry.

[Frankk]

My 2 cents on that,

 

A way to achieve this is to add 2 fields: 1 for tax order and 1 for tax applied on sub-total.

[KayoteX]

So, any ideas?

[lostmind]

I've been bugging Matt for this feature for a while. I believe that we will see something from it very soon.

[KayoteX]

I hope too

[9DollarDomains]

Well, I would think that the most flexible manner would be to have the items themselves with flags for ''tax1 taxable?'' and ''tax2 taxable?'' (since not every item is PST and GSTable - although most are), and also a place where tax2 could be set to be 'tax on items', or 'tax on items + tax1'.

 

In Saskatchewan, Canada - it's fairly simple; we charge PST and GST on nearly all products, and the taxes aren't cumulative - they are just on the taxable items. So, it's simply a $10.00 item with .50c PST and .50c GST.

 

However, there would be places in the world (like Quebec) where it's a $10 item, with tax1 on the item, and then tax2 would be applied to the total of the items and the 1st tax. So, in the tax config screen, something like...

 

Tax# Name % Tax Applied to

Tax1 GST 5.0 Taxable Items

Tax2 QST 7.5 Taxable Items + Tax1

[DIYWebHosting]

Is support for multiple taxes planned for an upcoming release or is it something that would require a major code rewrite to implement? We would love to see it!