Configuring a Luxury Tax (Retail Sales Items Only)

Note:

Starting with Simphony 19.7, Luxury Tax will be handled by the new tax type Add On, Excludes Start Amount. Therefore, it will be necessary to configure your system to use this new implementation after upgrading.

Luxury items can be targeted to apply an additional sales tax based on their price and the configured threshold amount in the Tax Rates module. Only the amount beyond the configured threshold is taxed. This luxury tax is currently only supported for retail sales items (not for food and beverage items).

Example

A jacket costs 200.00. The law states items with a price of over 175.00, must then be taxed with an additional 10% tax.

Table 13-6 Breakdown of an Applied Luxury Tax Item

Line Item	Calculation	Taxable Amount	Total
Jacket			200.00
Taxable Amount	200.00 minus 175.00	25.00
Tax	25.00 x .10		2.50
Total Due			202.50

To configure a luxury tax:

1. Select the Enterprise, property, or zone, click Setup, and then click Tax Rates.
2. Insert a new tax rate record and enter a name in the Name field.
3. Select 2 - Add On, Percentage from the Type drop-down list. When configuring a luxury tax rate, only this tax type is supported.
4. Enter an amount which serves as the threshold for the luxury tax in the Start field.
5. Enter the percentage value of the tax rate in the % column.
6. Complete this tax rate’s configuration and Save.
7. Click the Tax Parameters module, and then click the Options tab.
8. Enable the 10 - Exclude Start Amount On Taxable Sales option and Save. This setting ensures the tax is not applied until you exceed the configured start amount, and we exclude the start amount from the taxable sales tax calculation.
9. From the EMC Home Page click Configuration, and then click Menu Item Classes.
10. From the General tab, select 1 - Single (> 1 not allowed) from the drop-down list and Save. This setting prevents quantity ordering from the workstation.
11. Click the Options tab and ensure option 38 - Item is Shareable is disabled.
12. Click the Condiment Groups tab and disable all required, allowed, and member condiment groups settings. Retail items such as clothing, are standalone items, and are not condiments, nor will they ever have any condiments to apply.

    Note:

    • Any service charges applied to luxury tax items behave as expected, regardless if the service charge is configured as automatic, manual, taxable, or nontaxable (based on the applied service charge’s assigned Tax Class setting).

    • Since luxury tax items are to be sold in retail locations, split check, conversational ordering, and combo meal functionality is not supported for these items.