Dynamics Community Forum Thread Details

Hi,

Sales tax can get very complicated and GP has many options in the sales tax area. Let me try to explain the Qualifiers and the 'based on' fields.

First, the Based on Field:

The Based on field helps us determine what the percentage you entered on the right applies to. Let's say we have a 5% Sales tax. 5% of what? Most of the taxes I work with apply the tax percentage to the full amount of the sale. What if only 80% of the sales price was subject to sales tax? To set this up you would select Percent of Sale/Purchase in the Based On field . The Percentage field would hold 5%. The field below the Round field tells the system what percent of the sale is subject to the 5% sales tax. In our scenario, you would enter 80% here. As soon as you enter an amount in the Taxable Percent field, the Min/Max becomes unavailable. To wrap this up, if a customer buys a $100 item their sales tax will be applied to 80% of the purchase price. So the 5% tax will be assessed on $80. The tax calculation would be $100 * 80% * 5% = $4.00

The Min/Max fields

The Min/Max fields refer to the minimum and maximum sale amount on which tax can be assessed. Let's say your state didn't charge any sales tax on sales under $20; You would enter $20 in the Min field. If your state didn't charge sales tax on sales over $5,000, you would enter $5000 in the Max field. You can use one or both of those fields.

The 'Include' field answers the question of whether you have to get the sale up to the $5,000 mark or if you only need to go from $20 to $5,000. If 'Amount within range' is selected, then you would only need to pay tax on the sale amount that is over $20 and up to $5,000. You would only pay tax on $4,980, ($5,000 - $20). If 'Full Amount' is selected, you would have to pay tax on the full $5,000. You wouldn't get any 'credit' for the part of the sale that was under $20. If I were to purchase two exotic wood tables that cost $4,000 each, tax would be assessed on the full $5000.

The Qualifiers

The Qualifiers are letting us know how we are supposed to calculate the amount of the sale when comparing it to the thresholds. Just how is that $5000 calculated? You have three choices: Unit Amount, Extended Amount or Invoice Total.

If 'Unit Amount' is selected the price of an individual item is used to see if the 'sale' went over the $5,000 mark. If I purchased two tables that cost $4000 each, I will have exceeded the minimum of $20, but not exceeded the maximum of $5,000 because neither unit cost more than $5,000. My invoiced amount would be $8000 and I would have to pay tax on all of it (or at least the total less $20).

If Extended Amount is selected, the Min/Max amount is compared to the total cost of the line item. In my two table purchase example, I would only need to pay tax on the first $5,000 (or 4,980) of the sale because the total price of the two tables exceeds $5000. Under this scenario $3,000 of the invoice would be tax free.

If Total Invoice Amount is selected, the cost of the individual items is not relevant. If I purchased items that were each under $5,000, but the total of all the purchases together was more than $5,000, I would not pay tax on the amount over $5000. This is the best deal of the three if you are the purchaser. If I purchase the two tables and some chairs, the total amount of the invoice, and not the individual items, is used to determine if the $5,000 ceiling has been met.

I hope this helps you better understand these fields.

Kind regards,

Leslie

What is Qualifiers and Based on fields in Tax details Maintenance window

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