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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

    Hi Mark
    Hope it's not too late to answer these questions.

    At the Canadian Museum of Nature, we are a Federal institution with buildings in both Ontario and Quebec. We do not do memberships as a product but I think it would be good to answer the questions anyways. We sell memberships as a contribution but include the tax in the total of the contribution. We then back the tax out using a custom report for the financial reporting and deposits. Taxes are set up as fees in our system.

    1. Yes, we have a national (federal) tax and a provincial tax that are applied to our memberships and other products.
    2. In most cases both taxes are applied on all our products and memberships (donations excluded), however, if the cost of the ticket is $1 or less, there is no provincial tax applied. We also exempt the provincial tax to anyone who presents an Indian Status card.
    3. We always use the same tax rate except in the cases mentioned above.
    4.So far we have only sold via Tessitura in our Ontario location but this won't always be the case. If we start selling products in our Quebec location, the tax rates will be different. In Ontario the Federal tax (GST) is 5% and the Provincial tax is 8%, these are combined together to form the HST and is applied as a single tax at 13%. In Quebec you can either do a 2 step calculation, if your "cash register" calculates in 2 steps; GST 5% on the sale price, then provincial 9.975% on the sale price excluding GST. If the cash register calculates in one step then you use the combined rate of 14.975%. This can be rounded to 14.97% if three decimal places is not possible.
    5. For us, so far, all our taxes are set up to report to the same GL even if they are different.
    6. There is nothing else I can think of at the moment but we do have the same scenario that Derrek mentioned in his point 6.

    Hope this helps

    Cheers
    Cindy

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  • 0 $organization

    Hi Mark
    Hope it's not too late to answer these questions.

    At the Canadian Museum of Nature, we are a Federal institution with buildings in both Ontario and Quebec. We do not do memberships as a product but I think it would be good to answer the questions anyways. We sell memberships as a contribution but include the tax in the total of the contribution. We then back the tax out using a custom report for the financial reporting and deposits. Taxes are set up as fees in our system.

    1. Yes, we have a national (federal) tax and a provincial tax that are applied to our memberships and other products.
    2. In most cases both taxes are applied on all our products and memberships (donations excluded), however, if the cost of the ticket is $1 or less, there is no provincial tax applied. We also exempt the provincial tax to anyone who presents an Indian Status card.
    3. We always use the same tax rate except in the cases mentioned above.
    4.So far we have only sold via Tessitura in our Ontario location but this won't always be the case. If we start selling products in our Quebec location, the tax rates will be different. In Ontario the Federal tax (GST) is 5% and the Provincial tax is 8%, these are combined together to form the HST and is applied as a single tax at 13%. In Quebec you can either do a 2 step calculation, if your "cash register" calculates in 2 steps; GST 5% on the sale price, then provincial 9.975% on the sale price excluding GST. If the cash register calculates in one step then you use the combined rate of 14.975%. This can be rounded to 14.97% if three decimal places is not possible.
    5. For us, so far, all our taxes are set up to report to the same GL even if they are different.
    6. There is nothing else I can think of at the moment but we do have the same scenario that Derrek mentioned in his point 6.

    Hope this helps

    Cheers
    Cindy

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