Setting up and applying taxes
You can set up sales taxes (applied on top of your prices) or VAT (included in your prices) and apply them to transactions. You can automatically calculate taxes and show them on invoices, and run reports to show taxes billed or collected.
You can apply taxes to:
- membership invoices
- event invoices
- manual invoices
What you need to know
- Self service transactions that generate invoices (event registration, membership application, membership renewal, and membership level change) will calculate applicable taxes based on your tax settings. Manually created invoices will include an option to apply taxes to items on the invoice.
- You can set up multiple taxes and apply up to two taxes per transaction. Different tax combinations can be set up for different contact field values (e.g. purchaser state/province).
- You can also set up exceptions for different membership levels and event registration types. There are a number of scenarios where this level of flexibility would come in handy:
- Some members are tax exempt, and you have grouped them in their own membership level.
- You are treating recurring donations (which are not taxable) as a membership level.
- Events in different locations are taxed differently so you treat them as different registration types.
To set up taxes for your site, hover over the Finances menu and select the Taxes option. From the Tax settings page, you can:
- add taxes and set tax rates
- choose between sales tax and VAT
- choose the default tax combination
- provide for different tax combinations to be applied based on a common field value
Adding and removing taxes
To add a tax, click the Add new tax button. Enter the tax name, the tax rate, and your tax account ID (which will appear on invoices).
To remove a tax, click Remove beside the tax.
You can create any number of different taxes.
Tax policy: sales taxes or value-added tax?
Under Tax policy, you indicate whether taxes are added to the total price during checkout (sales tax) or included in the total price (value-added tax or VAT). Sales taxes are typically used in Canada and the United States, while VAT is more common in European countries, as well as Russia, China, India, and Scandinavian countries.
Your choice will apply to all the taxes you have created.
Tax rules: how taxes are calculated
After setting up your taxes and defining your tax policy, you can:
- choose the default tax combination
- set the conditions for overriding the default tax combination using common field values
- choose the types of invoices to which taxes apply
Choosing a default tax combination
You can choose up to 2 taxes to be applied by default, in the absence of any other overriding condition.
The taxes you select will be applied separately to the purchase price.
Overriding the default using common field values
Since sales taxes can vary from one jurisdiction to another, you can provide for different tax combinations to be applied based on the value of a common field. These settings will override the default tax combination.
For example, if you've set up a common field called State/Province, you can select this field then define different tax combinations for each state or province.
To set the conditions for overriding the default tax combination, follow these steps:
- Check the Override default based on contact's common field checkbox.
- Choose the common field from the drop-down list (e.g. State or Province).
- Choose a value for the common field (e.g. Quebec).
- Choose up to 2 taxes to be applied to contacts with that common field value.
- Click Add rule to choose taxes for other field values (e.g. Ontario).
Tax scope: choosing where to apply tax
After you have set up the tax calculations, you can choose whether you want to apply them to membership invoices and event invoices. Regardless of your choices here, you can define exceptions for specific membership levels and event registration types.
When you are done setting up your taxes, click Save changes.
Setting tax exceptions
For each membership level and event registration type, you can choose whether to follow the tax scope settings, or ignore the tax scope and apply or disable tax for this membership level or event registration type.
You can make this choice on the General tab for each membership level, and when adding or editing an event registration type.
If you enable Use tax scope settings…
Taxes will be applied to invoices for this membership level or registration type according to your tax scope settings. If the word (applied) appears at the end of the option, then tax has been enabled for this invoice type.
If you disable Use tax scope settings…
You can override your tax scope settings by clicking the Enable taxes or Disable taxes option. If the word (applied) appears at the end of the Use tax scope settings option, you can click Disable taxes below to disable taxes for this membership level or registration type. If the word (disabled) appears, you can enable taxes for this membership level or registration type by clicking Enable taxes.
If you choose Disable taxes…
Taxes will be not applied to this membership level or event registration type regardless of any other tax setting.
If you choose Apply taxes…
Taxes will be applied to this membership level or event registration type regardless of any other tax setting. Taxes will be applied according to your tax settings.
After you have made your choice, click Save.
You can generate reports summarizing or detailing the taxes billed and collected during different time periods.
To generate a tax report, hover over the Finances menu and select the Reports option. Within the report list, click the Taxes link.
By default, a summary report is displayed.
To view a detailed report, displaying individual entries for each invoice, click Detailed.
By default, the detailed tax report shows the gross amount billed, the taxable amount, and the amount of tax billed (from all invoices, whether they have been paid or not). To view the amount collected (from fully paid invoices only), click Collected.
You can filter the report by date. You can select from one of the predefined date filters (last 60 days, this month, this year, last month, last year), or use the calendar controls to select your own date range.
You can export the tax report to a PDF file or to an Excel file.
Limitations and workarounds
Wild Apricot does not currently support compound tax, where a tax is calculated on the subtotal after another tax has been applied, instead of separately on the gross amount billed. If you live in a jurisdiction that applies a compound tax, you can adjust the percentage of your second tax to take the compounding effect into account. For example, if the first tax is 5% and the second tax is 10%, you can set the second tax to 10.5% to achieve the compounding effect. The formula for this is: