Freight taxable in SAles Transaction Entry

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Posted on by Nhi Nguyen

Hi folks,

Please help me out with this issue in GP. When I invoice customers and put the shipping cost in the “freight” (highlighted below) they get charged tax on whatever I put in that box. It seems to only be Canadian customers but I am not sure why that is. Is there a way to make the “freight” box/field nontaxable?

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Thank you in advance for your support.

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twelvestrikes 3,657 on at

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RE: Freight taxable in SAles Transaction Entry

Hi Nhi

Tax being charged on Freight (or Miscellaneous) is based on your SOP Setup.

Check what you have setup Microsoft Dynamics GP > tools > setup > Sales > Sales Order Processing > Options

Here you will find how tax is to be handled for Non-Inventory Items, Freight and Miscellaneous charges.

Your options are Taxable (specify tax schedule), Non Taxable or Base on Customer (tax schedule assigned to the Customer Master record).

You can over ride the default by clicking on the Blue Arrow next to the Freight line and changing how tax is applied.

In your case, if you don't want tax charged, then change the Freight Line to Non Taxable, and no tax should be charged on this SOP transaction for Freight.

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Nhi Nguyen on at

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RE: Freight taxable in SAles Transaction Entry

Hi Jeff,

Freight is non taxable by default. But if I put in the amount in the field, GP calculates tax on freight also.

If I add a line item for shipping cost instead, GP calculates tax on the items only (as shown in the above picture).

Is there something to do with the shipping address?

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twelvestrikes 3,657 on at

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RE: Freight taxable in SAles Transaction Entry

Hi Nhi

Open your SOP Transaction Entry Window and select the invoice in question.

Enter an amount on the Freight Line. After you enter the amount open the Sales Tax Schedule Entry Window (Blue Arrow pointing to the right) next to the where you entered the Freight amount.

The option for Freight should be set as Non-Taxable. I have tested it out in my system and it is working as expected.

If this doesn't work for you, then more information may be required, but first confirm the above Sales Tax Schedule Window is set to Non Taxable.

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Nhi Nguyen on at

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RE: Freight taxable in SAles Transaction Entry

Hi Jeffrey,

Freight is set up as Non-taxable. I think because the ship to address is in Canada and the tax schedule ID for this customer is AVATAX so the freight is also taxed?!

When I change the tax schedule ID to GO LIVE, both products and freight are not taxed. How can I set it up to charge tax on the products only?

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twelvestrikes 3,657 on at

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RE: Freight taxable in SAles Transaction Entry

Hi Nhi

I am going to need some setup information from you.

Please go to Microsoft Dynamics GP > tools > setup > company > company > options

Let me know if the check box is marked next to the rows with:

Use Shipping Method when Selecting Default Tax Schedule

Enable Canadian Tax Detail

Next determine the shipping method used for this transaction by going to the SOP transaction entry window, selecting the transaction and then opening the Sales Customer Detail Entry window (blue arrow pointing to the right next to the Customer ID record.

For Display, choose Ship to Address

Is the Ship to Tax schedule correct?

Note the Shipping Method and then go to Microsoft Dynamics GP > tools > setup > company > shipping methods and select the shipping method that was used for the ship to address.

When you select the shipping method, is the shipping type set as Pickup or Delivery?

I always set my taxes to be based on Customers, or Vendors and the shipping method will drive which tax table is being used.

thanks

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Nhi Nguyen on at

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RE: Freight taxable in SAles Transaction Entry

Hi Jeff,

"Enable Canadian Tax Detail" is not selected.

The Shipping method is Delivery but in the Bill to address, it is Pickup.

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