Running National Tax Automation

Tax automation rules can be defined as Global Rules, Domicile Rules, and Entity Rules. When you create a global rule using the Tax Automation Global form, when it is saved, the rule is copied to all Domiciles and Entities.

If required, the Global rule can be overridden at the Domicile or Entity level. When you create a Domicile rule using the Tax automation Domicile form, when it is saved, the rule is copied to all Entities that belong to that domicile. if required this rule can be overridden at Entity level.

You can add multiple rules for each account. To enhance the flexibility of tax automation, you can perform the following for each rule that is created:

  • Select a different tax automation rule (Logic). You can create two or more rules all using the same Logic or a different logic selection for each one.
  • Select a different source (Source Account). You can select a different Source Account for each rule, or the same Source Accounts for one or more of the rules.

To run National Tax Automation:

  1. From the Home page, click Applications, and then click Overview.
  2. Click the Dimensions tab, then under the Data Source dimension, create the Data Source members that you require to store tax automation rules. See Adding Tax Automation Rules to Data Source Dimension.
  3. On the Home page, click Tools, then Variables.
  4. Select the Tax Automation Target Account from the Member Selector, and then click Save. The account is displayed on the Tax Automation form.
  5. On the Home page, click Applications, then Configuration, and then click Tax Automation.

    Note:

    If the period has not been started, the Global Rules screen will be blank.

    Select Tax Automation
  6. On the Tax Automation form, select the appropriate tab for the entities to which the rules are to be applied:
    • Global Rules-- on Tax Automation Global -- Global applies the rule to all entities within the system.
    • Domicile Rules on Tax Automation Domicile -- Domicile applies the rule against all entities in that domicile. Domicile refers to the country or jurisdiction in which the entity is located. For example, Canada is the Domicile for Montreal at the National Level, and US is the Domicile for New York.
    • Entity Rules on Tax Automation Entity-- Entity applies the rule to the entity that you selected.

    Tax Automation assigned different rules and source accounts for one account.
  7. If the page is blank, right-click the first cell of the first row to display the pop-up menu, and select Tax Automation, and then Show All Accounts. This step adds a new blank rule for each tax account. See Adding Tax Automation Rules to Data Source Dimension.
  8. Right-click the rule name cell (for example, Global Rule 1) to display the pop-up menu, and select Tax Automation, and then Add Rule to create one additional rule for each tax account. The rule is created at the bottom as a last rule, and the selected rule data is copied into the newly created row. Click Refresh Database.

    Note:

    When adding the rule, ensure that placeholder members have already been created on the Data Source dimension, otherwise, the Add Rule will not create a new row. You can add Rule 2 only after Rule 1 has been defined and saved. See Adding Tax Automation Rules to Data Source Dimension
  9. Optional: Right-click the rule name cell to display the menu, and select Tax Automation, and then Delete Rule to delete one rule per account. The Delete rule deletes the selected rule by shifting the rules up from the bottom of the list. Deleting the first row only clears the rule, and the row is not removed.

    Note:

    You cannot delete Global rules from the Domicile form, and you cannot delete Global and Domiciles tules from the Entity form.
  10. Under the Disabled column, select Disabled to exclude the entity from the calculation. By default, Enable is selected for all base entities.

    For example, to override Global and Domicile rules by an Entity rule, set the Global and rules to Disabled, and then enable an Entity Rule to override the other rules and redirect the values.

  11. Under Logic, from the drop-down, select the logic to be applied to the row. You can select a different tax automation rule for each rule created for the account. The following rules are available:
    Logic selection
    • Pull--Takes the specified percentage of the Source account and applies it to the Target account

      Example:

      • PULL 50%
      • Source Account : 100
      • Destination = (100 * 50%) = 50
    • Movement--Takes the difference between the current period amount of the Source account and the last period of the prior year's amount of the Source account, and applies the amount to the Target account.

      Example:

      • MOVE 20%
      • Source Account: Prior Year: 100; Current: 150
      • Destination = ((150-100) * 20%) = 10
    • Squeeze--The value at the intersection of the source Account and source Movement must equal the ending balance in Temporary Differences for the target Account when squeezing from the book or any supplemental schedules.

      Squeeze from supplemental schedule (such as Fixed Assets):

      • Example 1: Fixed Assets:
        • Source Account/Movement = -8110 (Book Basis minus Tax Basis for Property and Related Plant, and Current Year Movement)
        • Ending Balance Temporary Differences for target Account/Movement = -8110

          Note:

          If any other Movements for the target account are populated on Temporary Differences, they will be "squeezed out" (subtracted) so that the ending balance remains the value of the Source Account/Movement.
      • Example 2:
        • Fixed Assets Source Account/Movement = -8110 (Book Basis minus Tax Basis for Property and Related Plant, and Current Year Movement)
        • Ending Balance Temporary Differences for target Account/Movement remains at = -8110.
        • Opening Balance Adjusted on Temporary Differences for target Account = 1000
        • The Difference between the Opening Balance Adjustment 1000 and P&L Total Movement -9100 still equals -8110

      Squeeze when source data is Book Data:

      • When no source or target Movement is specified in Tax Automation, the source Movement defaults to TB Closing and the target movement defaults to Automated (Current Year). A valid Source book account must be specified.
      • The value will display in Temporary Differences in Movement Automated and the Ending Balance = Source Book Account value.

    Note:

    To see examples of how to create rules that contain a combination of multiple rules to perform a transaction., see Creating Tax Automation Using Multiple Rule Combinations.
  12. Under Percentage, enter the a whole number or decimal and whole number to represent the percentage of the book data to be copied to the selected entity. For example, for 100%, enter 1, or for 50%, enter .5. The figures display correctly when you exit the cell.
    Enter the percentage of the book data to be copied to the selected entity.
  13. Under Source Account, select the source account number from which you want to copy data. You can select a different Source Account for each rule created for the account.
    Select the Source Account
  14. Under Source Movement, select the account from which the data will be drawn.
    Select the Account
  15. From the drop-down under Target Movement, select the account to which you want to move the data. If no value is selected, the default is Automated for the Movement dimension.
    Select the Target Movement
  16. Click Save. You can see which entities have been impacted by viewing Data Status. When you click Save, all the rules are pushed to the base Domiciles and Entities.

    The base entity inherits the rules defined for Domicile specific rules, or if that is not specified, the base entity will inherit the rules defined in the Global form.

  17. Under Actions, select Consolidate to run Tax Automation.