VAT Taxes and Freight Charges

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We are being audited by Revenue Canada and have been told that we are incorrectly collecting GST/HST taxes from our Canadian customers. Heretofore, we have not been collecting VAT taxes on Freight Charges, only product charges. We are now being told that we should be doing this. However, I can't seem to find out how to do this in GP (Currently running 2010). We need to be able to do this based either upon the assigned Provential Tax Schedule or by Customer. Can GP do this and would someone point me in the in the right direction.

Thanks,

Steve

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Brad Schroeder 10 on at

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Steve,

You can setup the freight to be taxable based on the customer. The setup is under the Sales Order Processing Setup - choose the Options button at the bottom of the window. This will open the Sales Order Processing Setip Options window and you can change the Freight default to be Base on customers.

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Thanks Brad for the info. I see where I can do this. However when I get to the customer records or Customers setup window; I cannot seem to find an option where I can selectively (by customer) turn on or off the Tax calculation to include or exclude freight charges. So I'm still stumped on this issue.

Steve

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Hi Steve,

If you choose the option above. The Tax (VAT) Schedule used will be the Tax Schedule attahed to the customer. I believe you will need to tick on the Use Shipping Methods in Tax Calculation tick box in the Company >> Options set up window.

If the customers default shipping method is DELIVERY type - then it will use the Customers Tax schedule. If it is PICKUP type - it will use the Tax Schedule attached to the Inventory Site.

The option to calculate tax on Freight is not a customer level option - its all or nothing...but using the customers tax schedule should suffice? I.e. you should be charging VAT at the same rate as the customers default VAT /Tax schedule.

Ian.

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Kelly Dettmann on at

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hi Steve,

You may have already found an answer to this question.

Yes- tax schedules can be setup on freight charges.

In the sales order processing side, go to tools> setup> sales> sales order processing> click options, under Tax options, there is a freight option where you can select taxable and select a schedule, base on customers, or non taxable.

Here are some articles with more info:

"Setup for Freight Taxes in Sales Order Processing"

support.microsoft.com/.../de

Freight tax is also covered in this article:

How taxes are calculated in Receivables Management, Sales Order Processing and Invoicing

support.microsoft.com/.../de

Please let me know if this helps.

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Community Member on at

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Steve,

I am using GP2010, however, where can one change this Freight default to be Base on customers?

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Hi MCE -- we've upgraded to GP2013 now, but I believe you will still find this in the same place as described by Kelly above. Go to MDGP>Tools>Setup>Sales>Sales Order Processing. This will open a window. Towards the bottom of the window is a button labeled "Options". Click on this to open another window. Make sure the "Advanced" radio button is selected in the Tax Calculations box. Under the drop down boxes in the upper left area select "Based on Customers" for those charges. Then you will need to select which tax schedules are specified for each customer. We use a customer class code that has assigned customers to different geographic tax areas. You can set up default tax tables for a customer class and then assign that class to those customers that meet your requirements. Steve

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