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My further thoughts on how to resolve this issue:
The incorporation of sales-tax-table into the splitting of Expenses is
accomplished by adding the Action of "Split Transaction By Sales Tax"
to the list of "Actions" available for the transactions on Expense
accounts.
"Split Transaction By Sales Tax" splits a transaction into item-value
and sales-tax.
For example in Ontario the HST sales tax is 13%. The value of sales
tax is 13/113 times transaction-value; the item-value is 100/113 times
transaction value.
As I see it, the problem with any automated "sales tax" at the general
ledger level, is that IN GENERAL a very complex matter. We usually see
these suggestions from people in jurisdictions where very simple (sales
tax a uniform rate applied to everything sold). To them simple, just a
rate table for every jurisdiction.
However some of us are in jurisdictions where this is not the case,
where whether sales tax applies to the item sold depends on what the
item is (category of item), possibly for some categories if the item
above a certain price, and possibly different rates for different
categories, etc. It might even depend on "seller's category of
business!* We see this as a VERY complex problem, not really something
to be done in the general ledger of the buyer..
That's what a POS (point of sales) application does. It is "told" the
jurisdiction and so looks up the rules for that jurisdiction. As each
item is rung up, decides if taxable, at what rate, and computes the tax.
It might also have a switch for "buyer exempt". The transaction out
(sales receipt) shows the cost of the items and the tax. << a POS system
usually does pother things, sending transactions to ITS General Ledger
and to ITS "Inventory system". Either way, the POS system is doing the
tax calculations for both General Ledger systems.
Michael D Novack
* For example, here in Massachusetts, if I walk into a store and buy a
pair of gloves, it will matter "what kind of store" and "how expensive
the pair of gloves". If bought in a clothing store, will usually be
considered in the category "clothing", not taxable if less than $175 (if
over, the portion of the price over $175 is taxable). But if bought in a
hardware store, classified as "protective gear" and is taxable. BUT --
the clothing store could be selling gloves taxed as protective gear
(specialized gloves) and the hardware store might be selling "clothing".
The issue here is that it is GENERAL PURPOSE clothing that is exempt and
the sort of store moves the dividing line. Sneakers bought in the
clothing store "general wear clothing" but bought in a "sporting goods"
shop "athletic gear".
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