[GNC] Determining HST Amounts from bank postings

[Michael or Penny Novack]

> ------------------------------------------
>
> My further thoughts on how to resolve this issue:
>
> The incorporation of sales-tax-table into the splitting of Expenses is 
> accomplished by adding the Action of "Split Transaction By Sales Tax" 
> to the list of "Actions" available for the transactions on Expense 
> accounts.
> "Split Transaction By Sales Tax" splits a transaction into item-value 
> and sales-tax.
>
> For example in Ontario the HST sales tax is 13%. The value of sales 
> tax is 13/113 times transaction-value; the item-value is 100/113 times 
> transaction value.

As I see it, the problem with any automated "sales tax" at the general 
ledger level, is that IN GENERAL a very complex matter. We usually see 
these suggestions from people in jurisdictions where very simple (sales 
tax a uniform rate applied to everything sold). To them simple, just a 
rate table for every jurisdiction.

However some of us are in jurisdictions where this is not the case, 
where whether sales tax applies to the item sold depends on what the 
item is (category of item), possibly for some categories if the item 
above a certain price, and possibly different rates for different 
categories, etc. It might even depend on "seller's category of 
business!*  We see this as a VERY complex problem, not really something 
to be done in the general ledger of the buyer..

That's what a POS (point of sales) application does. It is "told" the 
jurisdiction and so looks up the rules for that jurisdiction. As each 
item is rung up, decides if taxable, at what rate, and computes the tax. 
It might also have a switch for "buyer exempt". The transaction out 
(sales receipt) shows the cost of the items and the tax. << a POS system 
usually does pother things, sending transactions to ITS General Ledger 
and to ITS "Inventory system". Either way, the POS system is doing the 
tax calculations for both General Ledger systems.

Michael D Novack

* For example, here in Massachusetts, if I walk into a store and buy a 
pair of gloves, it will matter "what kind of store" and "how expensive 
the pair of gloves".  If bought in a clothing store, will usually be 
considered in the category "clothing", not taxable if less than $175 (if 
over, the portion of the price over $175 is taxable). But if bought in a 
hardware store, classified as "protective gear" and is taxable. BUT -- 
the clothing store could be selling gloves taxed as protective gear 
(specialized gloves) and the hardware store might be selling "clothing". 
The issue here is that it is GENERAL PURPOSE clothing that is exempt and 
the sort of store moves the dividing line. Sneakers bought in the 
clothing store "general wear clothing" but bought in a "sporting goods" 
shop "athletic gear".