Tax Calculation Methods: To Create Taxes

The following activity will walk you through the process of creating taxes with different calculation methods.

Story

Suppose that you, as an accountant of SweetLife Fruits & Jams, want to explore different tax calculation methods of sales taxes. You want to configure a training tax zone and add taxes that use the following calculation methods:

  • Exclusive Document-Level
  • Exclusive Line-Level
  • Inclusive Line-Level

To be able to compare the difference in how these taxes are applied, the taxes will use the same tax rate of 5%. You are going to use the same customer account (Candyy Cafe) in all activities of this lesson.

Configuration Overview

In the U100 dataset, for the purposes of this activity, the CANDYY customer account has been configured on the Customers (AR303000) form.

Process Overview

In this activity, you will create a training tax zone for the purposes of this activity on the Tax Zones (TX206000) form; you will then create the needed taxes on the Taxes (TX205000) form and assign them to this tax zone. On the Tax Categories (TX205500) form, you will add the created taxes to the TRAINING tax category.

System Preparation

Before you begin to create taxes with different calculation rules, launch the MYOB Acumatica website with the U100 dataset preloaded, and sign in as an accountant Anna Johnson by using the johnson username and the 123 password.

Step 1: Creating a Tax Zone

To create a separate tax zone in which you will later create taxes, proceed as follows:

  1. Open the Tax Zones (TX206000) form.
  2. On the form toolbar, click Add New Record, and specify the following settings in the Summary area:
    • Tax Zone ID: TRAINING
    • Description: Calculation rules
  3. On the form toolbar, click Save to save the created tax zone.

Step 2: Creating a Tax with the Exclusive Document-Level Method

To create a tax that uses the Exclusive Document-Level method, proceed as follows:

  1. Open the Taxes (TX205000) form.
    Tip:
    To open the form for creating a new record, type the form ID in the Search box, and on the Search form, point at the form title and click New right of the title.
  2. On the form toolbar, click Add New Record, and specify the following settings on the Tax Settings tab:
    • Tax ID: EXDOCLEVEL
    • Description: Exclusive Document-Level Tax
    • Tax Type: Sales
    • Calculation Rule: Exclusive Document-Level
    • Cash Discount: Does Not Affect Taxable Amount
  3. On the Tax Schedule tab, click Add Row on the table toolbar and specify the following settings in the table:
    • Start Date: 1/1/2024
    • Tax Rate: 5
    • Reporting Group: Default Output Group

      The tax is not assigned to any tax agency, so only the default output group is available for selection.

  4. On the Zones tab, click Add Row on the table toolbar, and select TRAINING in the Tax Zone ID column.
  5. On the GL Accounts tab, select 24100 in the Tax Payable Account box.
  6. On the form toolbar, click Save to save the created tax.

Step 3: Creating a Tax with the Exclusive Line-Level Method

To create a tax that uses the Exclusive Line-Level method, proceed as follows:

  1. While you are still on the Taxes (TX205000) form, click Add New Record on the form toolbar, and specify the following settings on the Tax Settings tab:
    • Tax ID: EXLINELEVEL
    • Description: Exclusive Line-Level Tax
    • Tax Type: Sales
    • Calculation Rule: Exclusive Line-Level
    • Cash Discount: Does Not Affect Taxable Amount
  2. On the Tax Schedule tab, click Add Row on the table toolbar, and specify the following settings in the table:
    • Start Date: 1/1/2024
    • Tax Rate: 5
    • Reporting Group: Default Output Group
  3. On the Zones tab, click Add Row on the table toolbar, and select TRAINING in the Tax Zone ID column.
  4. On the GL Accounts tab, select 24100 in the Tax Payable Account box.
  5. On the form toolbar, click Save to save the created tax.

Step 4: Creating a Tax with the Inclusive Line-Level Method

To create a tax that uses the Inclusive Line-Level method, proceed as follows:

  1. While you are still on the Taxes (TX205000) form, click Add New Record on the form toolbar, and specify the following settings on the Tax Settings tab:
    • Tax ID: INCLINELEVEL
    • Description: Inclusive Line-Level Tax
    • Tax Type: Sales
    • Calculation Rule: Inclusive Line-Level
    • Cash Discount: Does Not Affect Taxable Amount
  2. On the Tax Schedule tab, click Add Row on the table toolbar, and specify the following settings in the table:
    • Start Date: 1/1/2024
    • Tax Rate: 5
    • Reporting Group: Default Output Group
  3. On the Zones tab, click Add Row on the table toolbar, and select TRAINING in the Tax Zone ID column.
  4. On the GL Accounts tab, select 24100 in the Tax Payable Account box.
  5. On the form toolbar, click Save to save the created tax.

Step 5: Creating a Tax Category and Adding Taxes

To create a tax category and add the created taxes to it, proceed as follows:

  1. Open the Tax Categories (TX205500) form.
  2. On the form toolbar, select Add New Record, and specify the following settings:
    • Tax Category ID: TRAINING
    • Description: Calculation rules
  3. On the table toolbar, click Add Row, and in the Tax ID column, select EXDOCLEVEL.
  4. Again click Add Row, and in the Tax ID column, select EXLINELEVEL.
  5. Again click Add Row, and in the Tax ID column, select INCLINELEVEL.
  6. On the form toolbar, click Save to save the tax category.