Examples of Tax Rates for a Canadian Tax Regime

The following scenarios illustrate when you might want to use exceptions or tax rules to meet your Canadian tax requirements.

Scenario

This scenario includes tax calculation for a Canadian tax regime. Purchases made in Ontario are generally taxed for Provincial Sales Tax (PST) at a tax rate of 8%. Accommodation purchases are generally taxed at 5% and food is generally exempt from tax.

EDC Corporation's Ontario store has been invoiced for employee accommodations, including hotel facilitates and food for a conference they attended. The invoice is for a hotel room, use of hotel office facilities, and food.

Set up tax rates to meet PST requirements for the store in Ontario as follows:

• Define a jurisdiction-based tax rate of 8% which is applicable to the hotel facilities usage. This is the standard tax calculation for the jurisdiction of Ontario.

• Define a rate exception with a special rate of 5% for the hotel room. This exception can be driven by a product fiscal classification.

• Define a Determine Tax Status rule which points to the exempt status of 0% rate for food based on a product fiscal classification. Use the tax rule over an exception since you can use a specific tax status and the default rate of 0% for that tax status.

Scenario

Another example of tax calculation for a Canadian tax regime is purchases of some items made on First Nation reserves have a First Nations Tax that is applicable at a tax rate of 5%. Since the requirements drive the applicability of the tax as well as the tax status and tax rate you can define a direct rate rule to handle both the applicability and the tax rate.