Working with GST Tax Exemption Status (MGTX)

Purpose: Use the GST Tax Exemption Status to define tax exemptions for items based on their status in particular provinces.

Overview: The Canadian GST (Goods and Service Tax) is a federal tax; the PST (Provincial Services Tax) is a province-level tax. You can use Order Management System to calculate either, both, or neither of these taxes based on the shipping address on the order.

You can specify a GST rate:

• as a default in the System Control table

• for each SCF in the SCF table

• for each postal code in the Postal Code table

You can specify a PST rate:

• for each SCF in the SCF table

• for each postal code in the Postal Code table

The GST rate from the SCF table, if any, overrides the rate from the System Control table, and the GST or PST rates from the Postal Code table, if any override the rates from the SCF table.

In addition to defining rates for each of these taxes, you must define a method for computing them. You define these methods in the SCF and, optionally, the Postal Code tables. To define specific items as exceptions to the PST and GST methods for a province, you use the Work with GST Tax Exemption Status function.

You can also define an exemption or exception for a specific customer. See Working with Customer Tax Status.

For more information:

• Working with SCF Codes (WSCF)

• Setting Up the Zip/City/State (Postal Code) Table (WZIP)

• item exemptions in U.S. states: Working with Item Tax Exemptions (WITX).

 

Note: If you are using this function to define tax exceptions for items, you should set the GST Item Status Default (A91) system control value to B (calculate both GST and PST tax).

In this chapter:

• Calculation Methods and Exemptions

• If You Tax Freight and Handling

• Work with GST Tax Exemption Status Screen (Selecting an Item)

• Work with GST Tax Exempt Status Screen

• Create GST Tax Exempt Status Screen

Calculation Methods and Exemptions

To understand the effect of different tax exemptions, it is useful to look at the calculation methods that may apply to GST and PST.

Method	Description	Calculation/Example (where the order total subject to tax = ORDER)	Example with Exemption Type of G or P
G	Calculate the GST on the order, including freight and handling, if applicable. Add this amount to the order total, then calculate the PST on the result.	Calculation: ORDER * GST rate = GST amount GST amount + ((GST amount + ORDER) * PST rate) = order tax Example: The order total subject to tax = $10.00 GST rate = 10% PST rate = 5% $10 * 10% = $1.00 GST amount $1 GST amount + (($1 + $10) * 5%) = $1 + ($11 * 5%) = $1.60	G = GST only; the amount subject to PST is 0 Example: $10 * 10% = $1.00 GST amount $1 GST amount + (($1 + 0) * 5%) = $1 + ($1 + 5%) = $1.05 P = PST only; the amount subject to GST is 0 Example: 0 * 10% = 0 GST amount 0 GST amount + ((0 + $10) * 5%) = 0 + ($10 * 5%) = $.50
P	Calculate the PST on the order, including freight and handling, if applicable. Add this amount to the order total, then calculate the GST on the result.	Calculation: O * PST rate = PST amount PST amount + ((PST amount + O) * GST rate) = order tax Example: (with same assumptions as above) $10 * 5% = $.50 PST amount $.50 PST amount + (($.50 + $10) * 10%) = $.50 + ($10.50 * 10%) = $1.55	G = GST only; the amount subject to PST is 0 Example: 0 * 5% = 0 PST amount 0 PST amount + ((0 +$10) * 10%) = 0 + ($10 * 10%) = $1.00 P = PST only; the amount subject to GST is 0 Example: $10 * 5% = $.50 PST amount $.50 PST amount + (($.50 + 0) * 10%) = $.50 + ($.50 * 10%) = $.55
S	Calculate GST and PST separately; neither tax is subject to the other.	Calculation: (O * GST) + (O * PST) Example: (with same assumptions as above ($10 * 10%) + ($10 * 5%) = $1 + $.50) = $1.50	G = GST only; the amount subject to PST is 0 Example: (0 * 10%) + ($10 * 5%) = $.50 P = PST only; the amount subject to GST is 0 Example: ($10 * 10%) + (0 * %) = $1.00

If You Tax Freight and Handling

You can tax freight and handling on orders as well as merchandise. In order to tax freight and/or handling, you must select the Tax on Freight (B14) and/or Tax on Handling (B15) fields in the System Control table. You must then select the corresponding fields in the SCF or Postal Code tables for the location where you tax freight or handling as well.

An item tax exemption by province affects the calculation of tax on freight and handling for items shipped to that province. Assuming that GST and PST normally apply to the order, the system uses the following logic to calculate tax on freight and handling:

Order-level freight method:

• If all items on the order are exempt from PST, the system does not calculate PST on freight or handling.

• If at least one item on the order is subject to PST, the system calculates PST on freight and handling.

• If all items on the order are exempt from GST, the system does not calculate GST on freight or handling.

• If at least one item on the order is subject to GST, the system calculates GST on freight and handling.

Line-level freight method:

• If the item is exempt from PST, the system does not calculate PST on freight or handling for that line.

• If the item is exempt from GST, the system does not calculate GST on freight or handling for that line.

• If the item is subject to PST, the system calculates PST on freight and handling for that line.

• If the item is subject to GST, the system calculates GST on freight and handling for that line.

The system determines the freight method on an order from the source code. See Working with Source Codes (WSRC).

You can also flag a special handling code as exempt from tax. See Establishing Additional Charge Codes (WADC).

Work with GST Tax Exemption Status Screen (Selecting an Item)

Use this screen to select an item for creation, review, change or deletion of GST tax exemption status.

How to display this screen: Enter MGTX in the Fast path field at the top of any menu or select Work with GST Tax Exemption Status from a menu.

Item field: Use the item field to enter the item code that you want to work with. This is a 12-position, alphanumeric field. Item codes are defined in and validated against the Item table; see Performing Initial Item Entry (MITM).

Work with GST Tax Exempt Status Screen

Purpose: Use this screen to select an item tax exemption by province to work with, or to create a new record.

How to display this screen: Enter a valid item code at the Work with GST Tax Exemption Status Screen (Selecting an Item).

Field	Description
Item	The code that represents the item subject to tax exemption by province. Item codes are defined in and validated against the Item table; see Performing Initial Item Entry (MITM). Alphanumeric, 14 positions; display-only.
Item description (Unlabeled field to the right of the item code)	The description associated with the item. Alphanumeric, 40 positions; display-only.
Prov (Province)	A code that represents the province where a tax exemption applies for this item. Alphanumeric, 2 positions; optional.
Sts (Status)	A code that represents the override tax status for the item in this province. Valid values are: • Both = Calculate both GST and PST • GST = Calculate GST only • Neither = Calculate neither GST or PST • PST = Calculate PST only Optional.

Screen Option	Procedure
Change GST tax exemption	Select Change for a province to advance to the Change GST Tax Exemption Status Screen. See the Create GST Tax Exempt Status Screen for field descriptions.
Delete a GST tax exemption	Select Delete for a province to delete it.
Display a GST tax exemption	Select Display for a province to advance to the Display GST Tax Exempt Status Screen. See the Create GST Tax Exempt Status Screen for field descriptions.
Create a tax exemption record	Select Create to advance to the Create GST Tax Exempt Status Screen.

Create GST Tax Exempt Status Screen

Purpose: At the Work with GST Tax Exempt Status Screen, select Create.

Field	Description
Item	The code that represents the item subject to tax exemption by province. Item codes are defined in and validated against the Item table. Alphanumeric, 14 positions; display-only.
Item description (Unlabeled field to the right of the item code)	The description associated with the item. Alphanumeric, 40 positions; display-only.
Province	A code that represents the province where a tax exemption applies for this item. Alphanumeric, 2 positions. Create screen: required. Change screen: display-only.
Override tax status	A code that represents the override tax status for this item in this province. Valid values are: • Both = Calculate both GST and PST • GST = Calculate GST only • Neither = Calculate neither GST or PST • PST = Calculate PST only Required.