Go to Organization Settings > Integration > Tax Setup. To create a new tax rule, click on the "Add Tax Rule" button. Enter the area that the tax rule covers, for example "Texas" (state) or "Canada" (country) and the tax rate in percentage. You may define tax rules down to a city or zip code. If you leave the area blank, the tax rule is considered to apply globally.
Note that the area is NOT the same as the tax jurisdiction. For example, if you are in New Zealand and required to collect 15% GST on all transactions even if the user is located outside of New Zealand, then you should specify a 15% global tax rule. If you specify a 15% tax rule with New Zealand as the area, then the 15% tax will not be applied to users with addresses outside of New Zealand (eg. Australia, USA, Europe).
How Are Tax Rates Applied?
A tax rule is considered to be applicable if the address is located in the area specified by the tax rule:
- For membership payments, the tax rules are applied based on the address (Account Address field) of the member's account.
- For events, the tax rules are applied based on the billing address provided during the event registration.
- For forms/carts/donations, the tax rules are applied based on the address (Account Address field) on the form template.
If the tax rule is global (ie. you left the area blank), then the tax rule will apply regardless of the address.
If you define multiple tax rules, then all the applicable tax rates are added up. For example, you define a tax rule for USA as well as a tax rule for Texas, users from Texas will have both tax rules apply - the applicable tax rate will be the sum of the 2 tax rates.
Tax Inclusive or Tax Exclusive
You can select whether taxes are included or excluded in the prices you specify when setting up your membership levels, event tickets, or form items. When set to tax exclusive, the applicable tax will be calculated and added to the price. So for example, if the membership price is $10, and the tax rate that needs to be applied to the member is 10%, then the member is required pay $10 plus $1 tax (10% of $10) = $11.
When you select tax inclusive, then all taxes are included in the specified price. If the membership price is $10 and the tax rate is 10%, then the actual item price excluding tax is $9.09. That means the tax amount is 10% * $9.09 = $0.91, so that $9.09 (item price excluding tax) + $0.91 (tax) = $10.
If you select tax inclusive note that:
- If you have non global tax rules, and a tax rate is not applicable, then that amount of tax is deducted from the price. For example, if you specify a tax rule of 10% for Australia, and the membership price is $10. But the member's address is outside of Australia, then the price of membership will be adjusted to $9.09 (the $0.91 tax that is supposed to be included in the price is not applicable, so it is deducted).
- If you create multiple tax rules, then the sum of all the tax rates are considered to be included in the prices. ie. if you have one tax rule for 10% and another tax rule for 5%, then 15% is considered to be included in the prices.
You can exempt certain users from tax by using the "Do not tax" field:
- For membership payments, a member is exempted from tax if the "Do not tax" field is enabled on their account.
- For events and forms/cartss/donations, a registrant is exempted from tax if the registrant has an account and the "Do not tax" field is enabled on their account. However if you have the "Do not tax" field on the event registration or form template, then whether the registrant enables the field on that registration that will take precedence (ie. the "Do not tax" status on the account is ignored).
Note that "do not tax" exemption will apply to all tax rules, including global tax rules.
What Happens When A Member's Address Change?
The new tax rule will automatically apply at the next renewal. Taxes will not be pro-rated for the current membership period.
What Happens If I Change / Delete A Tax Rule?
All your members will transition to the new tax rate on their next renewal, there is no pro-rating or charges/credits for their current membership period. Depending on your payment gateway, our system may need to update recurring billing accounts for your members one by one, which may take some time. Please do not interrupt this process. If you encounter any issues with this transition, please contact us.