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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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  • Former Member
    0 Former Member $organization

    Hi Mark, 

    I asked our Finance team about this, here's the response:

    HST is a combination of two sales tax (Federal portion 5%) and an Ontario portion of 8%. Every province will have different tax rates and subject to change as a result of provincial budget. For now, Alberta is the only province with no provincial sales tax (hence only 5% HST rates) QST is calculated based on good values plus Federal sales tax. All other province is simple combination of the two rates.

    Charging HST based on location is somewhat complex. For performance hall, location of hall usually is correct. 

    One GL bucket is usually good enough for tax collected in a particular province if the tax payer is not retailers or wholesaler.

    I hope that helps.

    Appreciate the effort to accommodate Canadian business needs around this topic. 

    wes

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  • Former Member
    0 Former Member $organization

    Hi Mark, 

    I asked our Finance team about this, here's the response:

    HST is a combination of two sales tax (Federal portion 5%) and an Ontario portion of 8%. Every province will have different tax rates and subject to change as a result of provincial budget. For now, Alberta is the only province with no provincial sales tax (hence only 5% HST rates) QST is calculated based on good values plus Federal sales tax. All other province is simple combination of the two rates.

    Charging HST based on location is somewhat complex. For performance hall, location of hall usually is correct. 

    One GL bucket is usually good enough for tax collected in a particular province if the tax payer is not retailers or wholesaler.

    I hope that helps.

    Appreciate the effort to accommodate Canadian business needs around this topic. 

    wes

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