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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,

    Thanks for reaching out!

    The Calgary Zoo uses Memberships as products but we use them as revenue source and not as a contribution.  For a bit more information on our memberships: that are all sold individually even if they are part of a HH.  The HH doesn't have any memberships. We have a number of different levels of memberships that all include access to the zoo plus the higher levels include other benefits such as parking, additional discounts and free programs.  The membership is sold to which ever individuals within the household that the patron choses (i.e. 2 Adults, 1 Child, 1 Senior), each has it's own record/record ID - or can be an individual record.  Each of our members also get a membership card and our NScan is setup to scan each card with no interaction from the person scanning - scans and records 1 visit against the member including whether adult or child.

    To answer the tax questions:

    We are in Alberta and only have the federal GST tax (we have no provincial taxes) that are charged to memberships.  We charge the tax separately - it is presented to the customer as separate items. Our pricing is the price of the item/membership/ticket plus GST and are separate line items.  example:  Child membership is $34.95 which is presented to the customer and the GST tax is added as a separate line item/fee.

    We currently do all our taxes for memberships, concessions & ticketing using fees.

    We only apply the tax that is applicable for our province.

    We don't have different rates but do have some items that are exempt from GST.  We have put them into different seasons and campaigns so can apply the rules accordingly.  We only have the one GL account code for our taxes but splitting them this way we would be able to put them to different GL account codes.  

    The tax can be applied per item or per transaction - we have set it to per item as we often sell items, especially in concessions for an even amount (since we don't have pennies) - so for an ice cream we charge so that the total with GST will be $3.00.  The rounding if buying many items can cause issues.

    What we can't accomplish right now is as a non profit organization we get a tax break on the GST so that we don't need to submit the full amount but just a portion (e.g. 40 60 split). What we would be helpful for our Finance department would be to be able to split off the portions to different GL account codes (one would be the GST tax account and the other would be the portion that would go to a revenue GL acccount code) but the customer would only see 1 line item / total labeled as GST.

    Please feel free to reach out if you need any further info or any clarification

    Thanks

    Have a great day!

    Brenda

Reply
  • 0 $organization

    Hi Mark,

    Thanks for reaching out!

    The Calgary Zoo uses Memberships as products but we use them as revenue source and not as a contribution.  For a bit more information on our memberships: that are all sold individually even if they are part of a HH.  The HH doesn't have any memberships. We have a number of different levels of memberships that all include access to the zoo plus the higher levels include other benefits such as parking, additional discounts and free programs.  The membership is sold to which ever individuals within the household that the patron choses (i.e. 2 Adults, 1 Child, 1 Senior), each has it's own record/record ID - or can be an individual record.  Each of our members also get a membership card and our NScan is setup to scan each card with no interaction from the person scanning - scans and records 1 visit against the member including whether adult or child.

    To answer the tax questions:

    We are in Alberta and only have the federal GST tax (we have no provincial taxes) that are charged to memberships.  We charge the tax separately - it is presented to the customer as separate items. Our pricing is the price of the item/membership/ticket plus GST and are separate line items.  example:  Child membership is $34.95 which is presented to the customer and the GST tax is added as a separate line item/fee.

    We currently do all our taxes for memberships, concessions & ticketing using fees.

    We only apply the tax that is applicable for our province.

    We don't have different rates but do have some items that are exempt from GST.  We have put them into different seasons and campaigns so can apply the rules accordingly.  We only have the one GL account code for our taxes but splitting them this way we would be able to put them to different GL account codes.  

    The tax can be applied per item or per transaction - we have set it to per item as we often sell items, especially in concessions for an even amount (since we don't have pennies) - so for an ice cream we charge so that the total with GST will be $3.00.  The rounding if buying many items can cause issues.

    What we can't accomplish right now is as a non profit organization we get a tax break on the GST so that we don't need to submit the full amount but just a portion (e.g. 40 60 split). What we would be helpful for our Finance department would be to be able to split off the portions to different GL account codes (one would be the GST tax account and the other would be the portion that would go to a revenue GL acccount code) but the customer would only see 1 line item / total labeled as GST.

    Please feel free to reach out if you need any further info or any clarification

    Thanks

    Have a great day!

    Brenda

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