More about tax

Note that work orders do not use the tax rules table.

The following must be considered when computing tax:

What type of charge occurred?
Where did the transaction occur?
For the transaction location, which tax codes apply?
Is the customer exempt?

For each applicable tax code:

What is the base? What is the rate?
If the base includes another tax code, get the tax previously calculated for that code.
Calculate the tax and store the value, rate, and base by code.
Continue with the next tax code.

What type of charge occurred?

The type of charge determines the taxes to apply and, for each tax code, the rules to consider to determine where the transaction occurred. The following table describes some charge types:

Type of charge

Billable work order

Lease invoice

Rental invoice > 30 days

Rental invoice < 30 days

Maintenance contract invoice

Sale of unit

Where did the transaction occur?

The location of the transaction is dependent on the type of charge. The following table describes the known rules.

Type of charge	Transaction Location
Type of charge	10 Ordering Facility	20 Assigned Facility	30 Repair Facility	40 Customer Location	50 Vendor Location	60 Contract (registry) location
Equipment purchase	Ordering facility	Unit assigned facility	N/A	Customer location	Vendor location	N/A
Billable work order - labor	N/A	N/A	N/A	N/A	N/A	N/A
Billable work order - parts	N/A	N/A	N/A	N/A	N/A	N/A
Contract > 30 days (Lease)	Unit assigned facility	Unit assigned facility	Unit assigned facility	Unit assigned facility	Unit assigned facility	Unit assigned facility
Contract < 30 days (Rental)	Rental facility (tax prov/state defined in rental agreement can be overridden)	Rental facility (tax prov/state defined in rental agreement can be overridden)	Rental facility (tax prov/state defined in rental agreement can be overridden)	Rental facility (tax prov/state defined in rental agreement can be overridden)	Rental facility (tax prov/state defined in rental agreement can be overridden)	Rental facility (tax prov/state defined in rental agreement can be overridden)
Sale of unit	N/A	Unit assigned facility	N/A	Customer location	N/A	N/A
Fuel island sale	Fuel ticket facility	Fuel ticket facility	Fuel ticket facility	Fuel ticket facility	Fuel ticket facility	Fuel ticket facility
Fuel island sale Qty based	Fuel ticket facility	Fuel ticket facility	Fuel ticket facility	Fuel ticket facility	Fuel ticket facility	Fuel ticket facility
Manual charge	Charge facility	Charge facility	Charge facility	Charge facility	Charge facility	Charge facility

States can further describe the transaction location rules for their counties.

Which tax codes apply?

In general, the type of charge and location determine the taxes to apply. The following is an example of the situations to consider. This is not inclusive.

Type of charge	Jurisdiction	Taxes to Apply
Billable work order - labor	BC, MB, ON, ...	PST, GST
Billable work order - parts	BC, MB, ON, ...	PST, GST
Billable work order - labor	NB, NS, NF, PEI	HST
Billable work order - parts	NB, NS, NF, PEI	HST
Lease invoice	All provinces	GST, PST
Lease invoice	Alabama	Lessor tax
Lease invoice - licensing	All	None
Rental agreement < 30 days	All provinces	GST, PST
Sale of unit	All provinces	GST, PST

There are exceptions to this rule, which require more than just the type of charge and location. Examples of exceptions are:

HST - If base-plated in an HST province, the full HST rate is applied. If base-plated elsewhere, then the PST of the province applies.
Transitional tax - Nova Scotia only. If base-plated in NS and the unit is a power unit, then a 2% (Apr to Mar 98, 1% April 98 ..., etc.) transitional tax is applied. The system must allow the tax to be removed due to the number of exceptions. One exception is that if the unit is for a rental of less than 30 days the tax is not applied.

Determining exemption

The customer may be exempt by tax code and jurisdiction. A table of exemptions in the customer profile is used to define this to Enrich. In addition, the tax exemptions may be overridden at the transaction level. For example, the tax exemption on a rental agreement may be overridden for that agreement only.

Determining the base value

The type of charge will initially determine the base value for the tax calculation. If the tax amount being calculated should include another tax value, such as the PST in Ontario including the GST, the dependent tax value is retrieved and added to the base to perform the tax calculation. To accomplish this, the dependent tax is always calculated first. The tax level on the tax code table is used to control this.

Determining the tax rate

Jurisdiction, tax code, and effective date define the tax rate. An additional rate level may be defined by equipment type in order to handle the IFTA self-assessment of tax.

Determining the tax account

Jurisdiction, tax code, account type, and effective date define the tax account. The following describes the entries:

Tax Code	Jurisdiction	Account Type	Effective Date	Account
GST	CDA	PST Charged	.	.
PST	BC, MB, ON, ...	PST, GST	.	.

Tax reporting

US county tax is a surtax where the state collects the tax and then transfers the revenue to the county/city. The state requires reporting of revenue by county/city in order to calculate the transfer amount. When the tax is calculated, the base value (revenue), jurisdiction, and tax code are stored with the result. A report lists these values by period and by jurisdiction (country, then province/state, then county and, finally, municipality).

Tax Exemptions

Tax exemptions may be defined by a combination of tax code, contract type, equipment pool, customer, and jurisdiction. Tax exemptions may also be defined for specific units.

Tax Tables

Tax codes are not used except as business parameters for special charge coding. The PST Rates table shows the rate, effective date, and order (alone, tax on tax, refundable tax on tax). The Equipment Type PST rates are multipliers; they are used to support interprovincial tax (tractors and trailers have separate rates); labor is always zero on interprovincial.

Tax Business Parameters

The following identifies the business parameter screen and its tax-related parameters.

Materials Management

GST Included Flag (I included, O out). Used to default PO line item creation.
GST Exempt Flag (Y/N). Used to default PO line item creation.
PST Charged on Parts (I issue, P purchase). At time of purchase, rolls taxes into the value of inventory at the time of receiving. At time of issue, no tax is taken on receipt.
PST on Supplies (Y/N).
Item Cat - 0 PST Inventory. Item category used to force PST to zero on issuance.

Maintenance Management

PST on Inter-facility (labour) (Y/N). When set to N, no tax on cost of labor will ever be assessed, regardless of all other tax settings surrounding labor cost.

Customer & Invoicing

Tax Code - GST. Used for linking the GST special charges for purchase orders to screen items.
Tax Code - PST. Used for linking the PST special charges for purchase orders to screen items.
Tax on Billable WO Lines (A all, B billable only, M maintenance reserve only, N non-taxable). Used for determining when taxes should be calculated on invoices to customers.
GST Registration Number (to print on invoice).

Finance & Admin

Optional Tax Handling (Y/N). Used to take tax amounts and distribute them to cost of inventory items, and increase value of inventory at time of invoicing.

Fuel Billing

Tax on Interdivisional (Y/N). Used to identify whether tax should be calculated when processing fuel tickets for interdivisional customers.

Work Order Cost Tax

The labor PST rate is based on the repair facility's province/state; however, sublet labor uses the PO province/state. Enrich checks the equipment type table first, then the PST table for the rate. Where multiple rates exist on the PST table, the order they are used is:

N - straight tax
Y - tax on GST
R - refundable, but taxed on GST

The material PST rate is based on the unit's domicile facility's province/state except for interprovincial or miscellaneous units. Interprovincial units are defined by a blank domicile facility assignment, so tax is based on equipment type for every province/state; in tax-on-tax and refundable provinces, you must divide the tax rate by 1.07 to get the multiplier for the table. Miscellaneous units use the repair facility's province/state. PST order is taken from the PST table. When the domicile PST rate is not defined, the repair facility is used. Enrich checks the equipment type table first, then the PST table for the rate. The default GST category is used.

If the Interfacility PST labor business parameter is set to N or the unit is set to customer ownership, the labor PST is zero.

Billable or maintenance allocation lines are non-taxable for cost. Non-billable work is cost taxable.

If contract types are defined, they can define the taxable status. Even a default contract type can define taxable status.

The refundable tax order computes to zero for labor and parts.

There is no tax on parts if tax is charged at the time of purchase, because it is already being carried in the cost of inventory.

PST on supplies is determined by a business parameter and by the province/state of the repair facility.

PST Payable and Interprovincial PST Payable (IP and PS accounts) account types should be created at the equipment type and province/state tables.

WO Cost Tax Accounts

Provincial unit (non-billable)
DR	Labor Expense		$15
	CR	Unallocated Labor		$10
	CR	PST Payable		$ 5
DR	Parts Expense		$30
	CR	WIP Inventory		$15
	CR	Supplies Revenue		$ 5
	CR	PST Payable		$10
Interprovincial units (non-billable)
DR	Labor Expense		$15
	CR	Unallocated Labor		$10
	CR	PST Payable		$ 5
DR	Parts Expense		$30
	CR	WIP Inventory		$15
	CR	Supplies Revenue		$ 5
	CR	Interprov PST Payable		$10

Notes:

Labor cost tax is rolled into labor cost and charged to the labor account.
Material cost tax is rolled into material cost, along with supplies and environmental charges, and their respective taxes. These are charged to the material account.
Offsetting entry to domicile PST payable, or interprovincial PST payable of repair facility.

WO Sublet Cost Tax

Tax of the PO province/state rate and order is used. Lookup is through the equipment type table first, then the PST rate table. PO line exemptions are used for both labor and material. Refundable tax is not allowed on interprovincial units for materials; it is charged regular tax order instead.

Work Order Invoicing Tax

The PST rate and order come from the repair facility province/state.

The GST rate comes from the customer master GST category.

Invoicing lines have cost types associated with them: labor, materials, supplies, environmental, sublet labor, sublet materials.

Customer exemptions (based on the assigned customer) are determined at the time of creation of the work order. Once exemptions are created for a work order, they can be overridden on the work order, but changes on the customer master don't affect the work order exemptions. GST or PST can be exempted, by cost type, but separation by province/state code is not supported. The business parameter for PST exemption is used regardless of the customer exemption.

The business parameter for non-taxable item category allows items that are normally taxable to be non-taxable for billing.

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