Examples of Tax Handling on Receivables Transactions

The tax determination process uses your tax configuration setup and the details on the Oracle Fusion Receivable transaction to determine which taxes apply to the transaction and how to calculate the tax amount for each tax that applies to the transaction.

Oracle Fusion Tax determines taxes on these transactions based on the transaction information and the tax configuration. Receivables captures tax determinants as a part of the transaction and line information. View tax lines on entering transaction header and line information.

Set up Receivables nonrecoverable tax accounts to record:

• Tax amounts on earned and unearned discounts

• Adjustments that you cannot claim as a deduction against your tax liability

Also, set up finance charge tax accounts to record tax amounts on finance charges that are used as a deduction against overall tax liability.

Examples of tax handling on Receivables transactions are discussed in the following sections:

• Standard Receivables transactions

• Credit memos

Standard Receivables Transactions

Oracle Fusion Tax automatically calculates transaction taxes based on the document details and the relevant tax configuration. You can override the tax attributes to change the tax calculated or enter manual tax lines. However, this depends on your security settings and the options specified during tax setup.

Credit Memos

Receivables calculates taxes on both On Account credit memos and Applied credit memos.

Tax calculation for On Account credit memos is identical to Receivables invoices. The only difference is that if your credit memo lines are a negative amount, calculated tax amounts are also negative.

Create an Applied credit memo at the transaction header level or at the transaction line level. At the header level, your entry is controlled by the Automatically derive tax from lines option. If this option is selected, you can only enter a line credit percentage or a line amount. The tax credit percentage is populated automatically, which is same as the line credit percentage.

When the Automatically derive tax from lines option isn't selected, there are three options available to you for crediting transactions:

• Line Only: You enter only the line credit percentage or amount. Only transaction lines are credited. Tax isn't credited.

• Line and Tax: You must enter the same credit percentage for both the line and tax. The line amount and tax amount are credited proportionately to each transaction line and tax line of the transaction.

• Tax Only: You enter tax credit percentage or amount. The tax amount is credited proportionately to each tax line of the transaction.

For example, you have a transaction with two transaction lines each having two calculated taxes:

• Transaction Line 1: 1000 CAD

  • Tax A: 100 CAD

  • Tax B: 50 CAD

• Transaction Line 2: 2000 CAD

  • Tax A: 0 CAD

  • Tax B: 100 CAD

If you do a tax only credit of 50%, the taxes are credited as follows:

• Transaction Line 1:

  • Tax A: -50 CAD

  • Tax B: -25 CAD

• Transaction Line 2:

  • Tax A: 0 CAD

  • Tax B: -50 CAD

If you already created a line only or tax only credit, your remaining line percentage and tax percentage isn't the same. If you want to credit the entire balance, click the Credit Entire Balance button. Even though the line and tax percentages are different, you can save and complete your applied credit memo.

For a line level credit, select and credit individual transaction lines. The tax amounts are credited in proportion to the transaction line amount being credited. In the previous example, if you credit transaction Line 1 by -100 CAD, the taxes are credited in proportion:

• Transaction Line 1: -100 CAD

  • Tax A: -10 CAD

  • Tax B: -5 CAD