Tolerance Rules

Tolerance rules specify the amount of variance that can exist between the amount of tax that you enter for a transaction and the tax amount that the system calculates. When you enter a tax amount that differs from the system-calculated tax amount, the system automatically issues a warning message for all tax types except VAT.

For VAT taxes, the system uses the tolerance rules that you set up to determine when to issue a warning or error message. The system does not issue a warning message until the difference between the tax amount that you enter and the tax amount that they system calculates exceeds the tolerance limit established for a warning. By setting up tolerance information, you control the type of message that the system issues.

Tolerance rules:

Apply to both understated and overstated amounts.
Apply only to VAT taxes and can be defined as either a percentage or amount.
For accounts receivable, the tolerance rules that you define do not apply to VAT taxes unless you also activate the option to understate taxes.

For example, you might specify a tax rule with a tolerance range by amounts as:

Tolerance amount for warning is 2.
Tolerance amount for error is 10.

To determine the tax amount, the system multiplies the taxable amount by the tax rate. If the taxable amount for a transaction is 1000 and the tax rate is 10 percent, the system calculates a tax amount of 100. Based on the tolerance range, the system determines the range for warning or error as:

Tolerance Range	Calculation
Range for warning	Tolerance amount for warning is 2: 100 + 2 = 102 100 - 2 = 98 The system issues a warning message if the tax amount that you enter is greater than 102 or less than 98 (that is, outside of the tolerance range of 98 to 102). Note: If you enter a tax amount of 98.01 or 101.99, the system does not issue a warning message. The amount is within the acceptable tolerance range.
Range for error	Tolerance amount for error is 10: 100 + 10 = 110 100 - 10 = 90 The system issues an error message if the tax amount that you enter is greater than 110 or less than 90 (that is, outside of the tolerance range of 90 to 110). Note: If you enter a tax amount of 109.99 or 90.01, the system does not issue an error message.

Tolerance Range

Calculation

Range for warning

Tolerance amount for warning is 2:

100 + 2 = 102
100 - 2 = 98

The system issues a warning message if the tax amount that you enter is greater than 102 or less than 98 (that is, outside of the tolerance range of 98 to 102).

Note: If you enter a tax amount of 98.01 or 101.99, the system does not issue a warning message. The amount is within the acceptable tolerance range.

Range for error

Tolerance amount for error is 10:

100 + 10 = 110
100 - 10 = 90

The system issues an error message if the tax amount that you enter is greater than 110 or less than 90 (that is, outside of the tolerance range of 90 to 110).

Note: If you enter a tax amount of 109.99 or 90.01, the system does not issue an error message.