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Multiple Tax Distribution Groups and Rules

Canadian Multiple Tax Distribution Rules functionality is designed to give you the flexibility to handle your Canadian Tax requirements. Whether you have one rebate or multiple rebates, self assessed or regular sales tax, you can design the formula to handle most of your tax situations.

The Multiple Tax Distribution window lets you direct your taxes to the appropriate accounts depending on whether the tax value should go to a liability, expense or receivable account.

The Group Name list of values pulls the previously defined values from the Tax Names window.

The Distribution Tax Name also pulls the values from the Tax Names window and brings along the tax rate with it.

There are several rule types:

can90000.gif Base - The tax code that the rebate could draw down from, such as GST or TPS.

can90000.gif Debit - The tax value account that is submitted for rebate (target account).

can90000.gif Credit - The account that offsets the base tax rule.

Consider a tax group with GST in it with a 70% rebate on GST and no summarization. The outcome is:

GL Account
Amount
Rule Type
Description
04.000.5600.000.000.000
7.00
Base
GST
04.000.5600.000.000.000
(4.90)
Credit
GST Offset
04.000.1100.000.000.000
4.90
Debit
GST Target (Receivable)
The Rebate check box indicates that there is a rebate associated with it, if the line is a Base Rule Type.

The Rebate Tax Name is only available when the Rule Type is a debit or credit. The Rebate Tax Name only has a list of values if the Rebate Tax Name is defined in the Rebate Tax Names window. When the Rebate Tax Name is chosen, the Tax Number associated with it also populates the window.

The Use Item Account check box controls which account code combination is used for the automatic generation of tax lines. If the check box is checked, the tax distribution is generated based on the same account that the item is being taxed. An unchecked check box creates the tax lines based on the account found in the Tax Names window. If MTD does not find an account combination in the Rebate Tax Name window, MTD will next search the Tax Names window for the account combination and stop when the account combination is found.

Here are several hints that you may follow when you design the group taxes:

1. MTD handles more than one rebate per formula. See Multiple Tax Distribution Formula and Frequently Asked Questions for more information.

2. Group Name (Tax), Distribution Tax Names and Rebate Tax Names must be set up in the Define Tax Names window before creating the formula.

3. Tax Type for the Group Name should usually be Sales keeping in mind that it will hold both Distribution Tax Names which are Sales and Use Tax Types.

4. Follow a naming convention that will identify that the Tax Group in the Group Name and/or Description.

5. If the Rebate box is checked please ensure that at least one pair of debit and credit base rules are associated with it.

6. The sum of Distribution Tax Name rates that are defined as Sales Tax Type should always equal the effective Tax Rate for the Group Name

Attention: MTD does not do compound taxes so effective rates must be used to ensure taxes are calculated properly.

7. The list of values for Rebate Tax Name will only appear when the previous entry for the Distribution Tax Name has the Rebate check box set to Yes.

8. The Rebate Tax Name used for the pair of debit and credit Rule Types must always be the same. It is strongly recommended that you set up the Credit Rebate rule type first, then the Debit rebate Rule.

9. Generally, the Base and the Credit Rule Types should both be set to Use Item Account so that if you are summarizing taxes, the two rules are netted out.

See Multiple Tax Distribution Formula for tax formula examples.

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