First, you must select the system's default tax rule. This rule will apply when you make sales, purchases, and/or other transactions. If you select “None,” no tax will be charged on your sales. If you wish to collect taxes (which is generally required), you must specify a tax rule, such as “Canada Taxes.”
It is possible to override the system’s default rule for certain clients or suppliers (for example, for a foreign client who is not required to pay local taxes). To do this, click on Clients > Clients and select the client record.
Then click the Terms tab in the client or supplier record and specify the tax rule to apply.
It is also very important that the province listed on your clients’ and suppliers’ records is correctly set, as it is used to determine the taxes on your sales, purchases, and transactions for them.
It is possible to override the system’s default rule for certain product or service categories. To do this, go to the Inventory > Categories menu and select a category.
In the Info tab, select Tax Rules. Click Save.
Things to check if taxes are not calculating correctly:
- The “Canada Taxes” tax rule has not been modified
- In the Client/Supplier record, under the Terms tab, verify that the tax rule is “Canada Taxes”
- Whether the Client/Supplier is located in Quebec/Canada or another province.
- The specified supplier account is taxable in the chart of accounts.
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