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Taxes (and memberships)

Mark Rhodes
$organization

Hello, Canadian friends,
I hope, as you are dealing with the immediacy of the pandemic, you might be able to spare a few minutes to think into the future and help us out with a question about our v16 development. I'm most interested to hear from organizations using membership as products, but anybody is welcome to participate.
First, some background. As you may know, we are overhauling our membership functionality and one of the things we are planning on is migrating organizations using memberships as products to the new version of memberships, where you'll be able to do things like discount memberships and mark membership levels as philanthropic vs. transactional. The transactional memberships will be backed by contribution transactions, as philanthropic memberships are... which brings us to taxes. My understanding is that, currently, taxes on memberships are modeled in memberships as products as price layers. Contributions don't have layers, so we are planning on representing taxes on memberships as fee type transactions in the database. Where we have questions is about how to set these fees up, and whether to try to create something that we might be able to extend into other types of taxes in the future. Since Canada has the most complicated tax structure for memberships (congratulations), we've come to you to get some details, which can help us figure out how many different permutations of taxes there might be. On to the questions!

  • First, just to confirm I have this right, there is both a provincial and a national tax that applies to memberships, and these taxes are included in the cost presented to the consumer, correct?
  • Are there other things you sell where there is only a national or only a provincial tax applied, or is it always both?
  • Are there things that you sell where the tax rates are different than the tax rates for a membership?
  • Do you ever have to apply a provincial tax for a different province, or only the one you are located in?
  • From an accounting perspective, would the GL accounts you use for collecting taxes for different things (e.g. memberships, performances) be different even if the type and rate of the tax is the same?
  • Are there any other tax wrinkles specifically regarding Canada or memberships I haven’t asked about that you think we should be aware of?

Thanks,

Mark Rhodes

Business Analyst

Tessitura Nework

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  • 0 $organization

    Thanks Mark!  Appreciate you reaching out.

    Here are my answers to the questions, but our scenario is slightly different as we are a National/Federal Museum, so the 'Provincial Tax' only applies to us in specific scenarios (not membership in our case).

    1. Yes, in some cases it is both taxes, and these amounts vary from province to province (but federal tax stays the same).  In our case, we only charge the federal tax.  So 1 or 2 taxes.  If the plan is to run these as fees, I think it is important to think about how this displays on TNEW.  Right now, you can either group fees or not.  But if you don't, it seems  to split them out by line Item...and when you have tax on every line item, it gets really long.  It would be nice to be able to group them in different ways such as true fees combine, and then the different taxes combined.

    2. There are some times that it is both, and sometimes just one or the other.  The rules change a little from province to province.

    3. Not in our case, the tax rates are always the same...the variable is whether or not the Provincial or the National or Both taxes apply.

    4. We have never had to apply the tax of a different province; however, again, we might not be the best use case for this as being a National Museum, things might be slightly different.  However, I think it would be rare to apply the tax from a different province in your own...

    5. In our case, taxes are already setup as fees, and taxes across all products dump into the same accounts. So we have a single account for Federal tax (GST) and a single account for Provincial tax (PST).

    6. We have always been selling memberships as products, so as far as I know, it is pretty straight forward with no wrinkles.  In our case though, we do have some memberships that are a membership that gets taxed normally PLUS a true donation that does not get taxed (ie: $125 membership taxable +$50 true donation (not taxable) for the total price of $175 where a portion is taxed, and a portion is not).  So something to keep in mind in terms of potentially having that double contribution going through...we would not want to be doing this in two transactions.

    Feel free to reach out  if you have any other questions or if something isn't clear!

Reply
  • 0 $organization

    Thanks Mark!  Appreciate you reaching out.

    Here are my answers to the questions, but our scenario is slightly different as we are a National/Federal Museum, so the 'Provincial Tax' only applies to us in specific scenarios (not membership in our case).

    1. Yes, in some cases it is both taxes, and these amounts vary from province to province (but federal tax stays the same).  In our case, we only charge the federal tax.  So 1 or 2 taxes.  If the plan is to run these as fees, I think it is important to think about how this displays on TNEW.  Right now, you can either group fees or not.  But if you don't, it seems  to split them out by line Item...and when you have tax on every line item, it gets really long.  It would be nice to be able to group them in different ways such as true fees combine, and then the different taxes combined.

    2. There are some times that it is both, and sometimes just one or the other.  The rules change a little from province to province.

    3. Not in our case, the tax rates are always the same...the variable is whether or not the Provincial or the National or Both taxes apply.

    4. We have never had to apply the tax of a different province; however, again, we might not be the best use case for this as being a National Museum, things might be slightly different.  However, I think it would be rare to apply the tax from a different province in your own...

    5. In our case, taxes are already setup as fees, and taxes across all products dump into the same accounts. So we have a single account for Federal tax (GST) and a single account for Provincial tax (PST).

    6. We have always been selling memberships as products, so as far as I know, it is pretty straight forward with no wrinkles.  In our case though, we do have some memberships that are a membership that gets taxed normally PLUS a true donation that does not get taxed (ie: $125 membership taxable +$50 true donation (not taxable) for the total price of $175 where a portion is taxed, and a portion is not).  So something to keep in mind in terms of potentially having that double contribution going through...we would not want to be doing this in two transactions.

    Feel free to reach out  if you have any other questions or if something isn't clear!

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