- About Sales Taxes in the POS
- Setting up a Sales Tax in the POS
- How Sales Taxes are Calculated
- How a Tax-Exempt Payment Tender is Calculated
About Sales Taxes in the POS
POS needs to be set up with the sales taxes applicable to your jurisdiction. When a sales tax is set up, it is available to be assigned to a category or an individual product.
- When one or more sales taxes are assigned to a category, then those taxes will be the default taxes for the items/products/services of the category upon checkout.
- When one or more sales taxes are assigned to a product, then those taxes will override the default sales taxes of its parent category.
Setting up a Sales Tax in the POS
To set up a sales tax in POS, complete the following steps:
- In Touch Admin, click POS Settings > Taxes. The POS Taxes screen appears.
- Click the Add a Tax Code button.
- Enter or select the following:
- Name - name of the sales tax (e.g., state tax, provincial tax, federal tax).
- GL Account - select the GL Account the tax is to be associated with.
- Percentage - enter the percentage of the tax.
- Click the Create Tax Setting button to apply your changes. You are returned to the POS Taxes screen, where the newly-added tax is listed.
- To added another sales tax, repeat the above steps.
Applying Sales Tax to a Category
- If applying the sales tax to a menu category, open the menu category. If applying the sales tax to a non-menu category (for products and services), open the non-menu category.
- In the Tax Assignment field, select one or more sales taxes. When a menu item or product is checked out, then the sales taxes of the category is applied.
- Click the Update button to apply your changes.
How Sales Taxes are Calculated
In the POS, taxes are applied to each line item individually, as opposed to adding taxes to the subtotal of all the items in a ticket.
Applying taxes to each line item ensures accurate and transparent calculations. It allows for a clear breakdown of the tax amounts associated with individual items, enabling customers to verify the accuracy of their purchase. Additionally, this method provides clarity in case of returns or exchanges, as it allows for precise adjustments to be made on a per-item basis.
It is important to note that the Mealsuite approach to tax calculations aligns with industry standards and legal requirements.
Example:
Item Name | Base Price | Tax Calculation | Rounded Tax Amount | Total |
Mars Bars | $1.50 | x 5% = 0.075 | $0.08 | $1.58 |
Kit Kat | $1.50 | x 5% = 0.075 | $0.08 | $1.58 |
Ham Sandwich | $3.50 | x 5% = 0.175 | $0.18 | $3.68 |
Venti Chai Latte | $2.50 | x 5% = 0.125 | $0.13 | $2.63 |
Totals | $9.00 | $0.47 | $9.47 |
The above table shows how each line item is taxed, rounded, then totalled, for a total cost of $9.47 as opposed to $9.45 if the tax percentage (5%) was applied directly to the subtotal of $9.00.
Multiple Sales Taxes
When two or more sales taxes are applied, then each tax is individually calculated for the item and added together. For example:
Item Name | Base Price | Tax 1 Calculation | Rounded Tax 1 Amount | Tax 2 Calculation | Rounded Tax 2 Amount | Total |
Mars Bars | $1.50 | x 5% = 0.075 | $0.08 | x 7% = 0.105 | $0.11 | $1.69 |
Kit Kat | $1.50 | x 5% = 0.075 | $0.08 | x 7% = 0.105 | $0.11 | $1.69 |
Ham Sandwich | $3.50 | x 5% = 0.175 | $0.18 | x 7% = 0.245 | $0.25 | $3.93 |
Venti Chai Latte | $2.50 | x 5% = 0.125 | $0.13 | x 7% = 0.175 | $0.18 | $2.81 |
Totals | $9.00 | $0.47 | $0.65 | $10.12 |
How a Tax-Exempt Payment Tender is Calculated
When a tax-exempt payment tender (e.g., meal voucher provided to a volunteer) is used, the value of that tender is prorated across all items to calculate the new item prices, which are then taxed according to each item’s tax rate.
MealSuite prorates items per the following formula:
The individual item price divided by the total price of all items multiplied by the payment tender value.
Assume the tax-exempt value being applied is $7.00. The calculations are as follows:
item | Base Price | Prorated Amount to Subtract (per formula) | New Item Price | Tax Rate of item (0% if tax-exempt) | Tax Amount | Total not covered by $7 tax-exempt voucher |
Beer |
$5.75 |
$3.22 |
$2.53 |
13% |
$0.33 |
$2.86 |
Chips |
$1.75 |
$0.98 |
$0.77 |
7% |
$0.05 |
$0.82 |
Facial Tissue |
$3.99 |
$2.24 |
$1.75 |
0% |
- |
$1.75 |
Lottery Ticket |
$1.00 |
$0.56 |
$0.44 |
0% |
- |
$0.44 |
$12.49 |
$7.00 |
|
|
|
$5.87 |
Refund of Item on Day of Sale
Void Refund - If an item is returned within the same day (i.e., before close time) and can go back to inventory (e.g., it was not consumed or damaged), then the item is voided from the original ticket and the calculations redone. Assume the chips from the ticket are voided:
Item | Base Price | Prorated Amount to Subtract (per formula) | New Item Price | Tax Rate of item (0% if tax-exempt) | Tax Amount | Total not covered by $7 tax-exempt voucher |
Beer |
$5.75 |
$3.75 |
$2.00 |
13% |
$0.26 |
$2.26 |
Facial Tissue |
$3.99 |
$2.60 |
$1.39 |
0% |
- |
$1.39 |
Lottery Ticket |
$1.00 |
$0.65 |
$0.35 |
0% |
- |
$0.35 |
$10.74 |
$7.00 |
|
|
|
$4.00 |
100% Discount Refund - If the item being refunded cannot be returned to inventory, then a 100% discount is applied to the item, as this will allow for cost and inventory tracking. Assume the chips from the ticket are 100% discounted:
Item | Base Price | Prorated Amount to Subtract (per formula) | New Item Price | Tax Rate of item (0% if tax-exempt) | Tax Amount | Total not covered by $7 tax-exempt voucher |
Beer |
$5.75 |
$3.75 |
$2.00 |
13% |
$0.26 |
$2.26 |
Chips |
100% discounted |
|||||
Facial Tissue |
$3.99 |
$2.60 |
$1.39 |
0% |
- |
$1.39 |
Lottery Ticket |
$1.00 |
$0.65 |
$0.35 |
0% |
- |
$0.35 |
$10.74 |
$7.00 |
|
|
|
$4.00 |
Note: The category of an item (e.g., alcohol category for a beer item) can be configured not to be covered by discounts. This is accomplished in Touch Admin via POS Settings > Categories and selecting the Cannot be discounted check box.