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Old 11-08-2012, 04:02 PM
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Tax Calculation Issues


Hello,

ISSUE 1
I just discovered a recent order that appears to have tax calculated incorrectly for the subtotal + shipping. I have "Tax Applies To Subtotal + Shipping" set for this zone, see attached. I also have the correct tax box checked in the product settings, see attached.

There were 5 items in the order, 1 item is subject to tax. The item ($4.50) plus shipping ($11.49) = $15.99. $15.99 x 0.13 (the Ontario HST tax) = $2.08 in tax. However, the system charged my customer only $0.59 in tax which is exactly $4.50 x 0.13.

ISSUE 2
There is currently to way to charge tax just on shipping. Most of my products are not subject to tax but I am still required to charge and remit tax for shipping. The amount of tax I am required to charge depends on the zone where I am shipping the product to in Canada (it could be 5%, 12%, 13%, or 15%). I REALLY like ecwid but this issue is costing me a lot of money so I may need to unwillingly leave Ecwid; please help!

Cheers,
Jason
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  #2  
Old 11-09-2012, 04:16 PM
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Lanna Lanna is offline
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Hi,

Quote:
ISSUE 1
I just discovered a recent order that appears to have tax calculated incorrectly for the subtotal + shipping. I have "Tax Applies To Subtotal + Shipping" set for this zone, see attached. I also have the correct tax box checked in the product settings, see attached.

There were 5 items in the order, 1 item is subject to tax. The item ($4.50) plus shipping ($11.49) = $15.99. $15.99 x 0.13 (the Ontario HST tax) = $2.08 in tax. However, the system charged my customer only $0.59 in tax which is exactly $4.50 x 0.13.
Thank you for reporting this issue. I've been able to reproduce it as well: when purchasing several products, one product with tax applied (calculated based on subtotal+shipping) and the others are tax free, the tax is calculated based on the product price only.
I'm passing this issue to the developers for further investigation. Sorry that you had to face it.
I'll keep you posted here.

Quote:
ISSUE 2
There is currently to way to charge tax just on shipping. Most of my products are not subject to tax but I am still required to charge and remit tax for shipping. The amount of tax I am required to charge depends on the zone where I am shipping the product to in Canada (it could be 5%, 12%, 13%, or 15%). I REALLY like ecwid but this issue is costing me a lot of money so I may need to unwillingly leave Ecwid; please help!
At present Ecwid allows applying taxes to subtotal or shipping+subtotal. Unfortunately it's currently not possible to apply taxes to shipping price only. If you're interested in this feature please vote for an idea to implement in Ecwid:
http://ideas.ecwid.com/forums/22031-...ipping-charges

As I see you already contacted us with a similar question and our support team consulted you a little in this thread:
http://www.ecwid.com/forums/showthread.php?t=6363
We gave you a workaround as to use user-defined shipping methods, i.e. setup shipping method calculated based on Subtotal or Weight of products being ordered (in Ecwid control panel, System Settings -> Shipping -> add shipping method -> shipping rate type 'Custom table'). You already have one method of this type.
I understand right now you're using Canada Post carrier-calculated rates and your concern was whether the user-defined methods could deliver the same rates. Basically, you can emulate Canada Post rates, including free shipping on orders over $100. So it will allow you to setup the shipping rates you need plus include the amount (that you usually charge for tax) into the rates.
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  #3  
Old 11-12-2012, 03:03 PM
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Lanna Lanna is offline
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Hi,

We've analyzed your Ecwid store more closely, particularly the order #BG1395 that had tax $0.59.
The tax was calculated properly. I'll clarify.

If you setup a tax calculated based on Subtotal+Shipping amount, both subtotal and shipping costs are taken only from the products to which this tax is applied.
So when you buy several products and the tax is applied to only one product X, the tax calculations will be as follows:

Tax = (Product X price + Shipping cost for product X) * Tax %

Where
Shipping cost for product X= (Product X weight * Ordered quantity of Product X) / Total weight of the products in the bag

In order #BG1395 this calculation was thus:
Tax = ($4.50 + $0.049) * 0.13 = $0.59
where 0.049 is the shipping cost for the product on which the 13% tax is levied.

Ecwid is designed this way on the purpose that you don't overcharge your customers: If only one product in the order is charged tax, the tax should be calculated based on the shipping cost of this very product, not all the products.
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  #4  
Old 11-12-2012, 05:17 PM
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Jason Koebel Jason Koebel is offline
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Hi Lana,

Thank you for your help and thorough examination of the issues. Your help is greatly appreciated! Unfortunately the solutions do not work, here's why.

ISSUE 2
Technically your solution could emulate Canada Post rates however in order to implement it I would need to setup 1320 separate rates. That is because there are 11 different Canada Post rate codes that apply to locations within Canada where I send packages from my location. Then within each rate code there are 66 possible weight category prices; 11 x 66 = 660 rates. In addition there are two possible shipping services that could be selected for each order; 660 x 2 = 1320.

The benefit of Ecwid integrating Carrier Calculated rates is so users don't have to manually create thousands of user defined rates and the shipping cost that the end consumer pays is accurate. I understand it is a lot of work to implement the code to allow tax to be applied to just the shipping amount but it falls into the category of a must have critical item for Canadian users who sell goods that are not taxable; this includes most grocery items (apples, flour, coffee, etc). The task of one user creating 1320 user defined rates is so large that practically speaking it's the same as saying it can't be done.

YOUR LATEST REPLY
Unfortunately the tax still was not properly calculated. In Canada, the consumer pays tax on the cost of shipping the entire package, in this case $11.49. The tax applied to shipping is not related in any way to the tax that is applied to the goods within the order. The cost of shipping is treated as a separate taxable item. Even if there are no taxable items in the order, tax on shipping is still required to be collected and remitted to the government. Most of my customers place orders that are composed of either partially or entirely non-taxable goods.

This is the correct way to calculate tax for order BG1395:
Tax on Goods = Taxable items x Ontario HST = $4.50 x 0.13 = $0.59
Tax on Shipping = Shipping Cost x Ontario HST = $11.49 x 0.13 = $1.49
Total Tax = Tax on Goods + Tax on Shipping = $0.59 + $1.49 = $2.08

Canadian tax laws require the ability to tax shipping as a separate item. In addition, the tax that applies to the cost of shipping may be different than the tax that applies to the goods within the order. It's essential that the tax on goods and shipping be separated within Ecwid.

I look forward to your response.

Cheers,
Jason
  #5  
Old 11-13-2012, 01:16 PM
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Lanna Lanna is offline
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Hi,

Quote:
ISSUE 2
Technically your solution could emulate Canada Post rates however in order to implement it I would need to setup 1320 separate rates. That is because there are 11 different Canada Post rate codes that apply to locations within Canada where I send packages from my location. Then within each rate code there are 66 possible weight category prices; 11 x 66 = 660 rates. In addition there are two possible shipping services that could be selected for each order; 660 x 2 = 1320.

The benefit of Ecwid integrating Carrier Calculated rates is so users don't have to manually create thousands of user defined rates and the shipping cost that the end consumer pays is accurate. I understand it is a lot of work to implement the code to allow tax to be applied to just the shipping amount but it falls into the category of a must have critical item for Canadian users who sell goods that are not taxable; this includes most grocery items (apples, flour, coffee, etc). The task of one user creating 1320 user defined rates is so large that practically speaking it's the same as saying it can't be done.
Yes, I see what you mean. From this point the solution to emulate Canada Post rates to replace them with manually created shipping methods isn't a good idea. An ability to receive automatic carrier-calculated rates indeed has a tremendous advantage that Ecwid offers.

Quote:
YOUR LATEST REPLY
Unfortunately the tax still was not properly calculated. In Canada, the consumer pays tax on the cost of shipping the entire package, in this case $11.49. The tax applied to shipping is not related in any way to the tax that is applied to the goods within the order. The cost of shipping is treated as a separate taxable item. Even if there are no taxable items in the order, tax on shipping is still required to be collected and remitted to the government. Most of my customers place orders that are composed of either partially or entirely non-taxable goods.

This is the correct way to calculate tax for order BG1395:
Tax on Goods = Taxable items x Ontario HST = $4.50 x 0.13 = $0.59
Tax on Shipping = Shipping Cost x Ontario HST = $11.49 x 0.13 = $1.49
Total Tax = Tax on Goods + Tax on Shipping = $0.59 + $1.49 = $2.08

Canadian tax laws require the ability to tax shipping as a separate item. In addition, the tax that applies to the cost of shipping may be different than the tax that applies to the goods within the order. It's essential that the tax on goods and shipping be separated within Ecwid.
I understand what schema you need. What I described in the previous post is how Ecwid tax calculation works by default. And at this rate the tax cost for your order #BG1395 was calculated rightly:
Tax = (Taxable Product Price + Shipping for this very product) * Tax
In your schema you need tax on shipping charge. It isn't possible in Ecwid at present, sorry.
It's a good addition, we've received similar requests from other clients. The idea is registered:
http://ideas.ecwid.com/forums/22031-...ipping-charges
And we will certainly consider implementing this feature.
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  #6  
Old 11-13-2012, 02:02 PM
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Jason Koebel Jason Koebel is offline
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Hi Lana,

Thanks again for your help. I see what you mean now regarding the second point.

Ecwid has done an excellent job so far and support is great; seriously, you guys are crazy good! However, unfortunately I can't continue to pay my customers taxes so I will regretfully begin looking for another cart.

Absolutely no offense to anyone is intended but that method of applying tax seems more like a mistake than a feature. It would have been much better to leave it open rather than limiting it's function to one tax application. There's really no sense in developing ways to add products and upload photo's until the basics of tax are in place; without it Ecwid can't be used. Of course it's easy for me to say, lol; I know. I get it, developing Ecwid is an immense process that takes time. I sincerely hope the idea gets implemented although at only 32 votes I assume there are greater priorities.

All the best and thanks again!

Cheers,
Jason
  #7  
Old 11-14-2012, 02:07 PM
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Lanna Lanna is offline
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Quote:
Originally Posted by Jason Koebel View Post
Hi Lana,

Thanks again for your help. I see what you mean now regarding the second point.

Ecwid has done an excellent job so far and support is great; seriously, you guys are crazy good! However, unfortunately I can't continue to pay my customers taxes so I will regretfully begin looking for another cart.

Absolutely no offense to anyone is intended but that method of applying tax seems more like a mistake than a feature. It would have been much better to leave it open rather than limiting it's function to one tax application. There's really no sense in developing ways to add products and upload photo's until the basics of tax are in place; without it Ecwid can't be used. Of course it's easy for me to say, lol; I know. I get it, developing Ecwid is an immense process that takes time. I sincerely hope the idea gets implemented although at only 32 votes I assume there are greater priorities.

All the best and thanks again!

So sorry to hear about your decision. We respect it and understand that the tax calculation on shipping charge only is very important for your business. We hope you will return to Ecwid since it looks a great solution for you in all the other aspects.
Although this idea is low on votes, the tax feature is one of the major requirements that should be updated. We're working on revamping this functionality in Ecwid and we’ll add the tax on shipping feature. Your Ecwid account will remain active so you will be able to use it any time again and follow our updates. Being a SaaS solution Ecwid has this wonderful advantage as to even if you don’t use your account the new features will still be delivered to your store. When we implement the tax on shipping this feature will be added to your Ecwid account automatically, and the only thing you’ll need to do is to switch back to Ecwid again.
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