Tax Reports: Examples

Example 1: One Tax Applied to All Items

A merchant has one tax rate applied uniformly to all items. One tax, taxable amount matches sub-total of prices on the order.

Order

ItemPriceTaxTax rateTax collectedSubtotal
Wrench$10.00Multnomah County5%$0.50$10.50
Hammer$10.00Multnomah County5%$0.50$10.50
Total $20.00 $1.00 $21.00

Payment table

AmountTax amount
$21.00$1.00

Payment tax rate table

Taxable amountTaxTax rate
$20.00Multnomah County5%

Tax report

Taxable amountTaxTax rateTax collected
Payments $20.00Multnomah County5%$1.00
Net $20.00 $1.00

Example 2: Two items have different tax rates

Wheat has a 10% wheat tax, and butter has a 5% butter tax. The net taxable amount is the same as the subtotal of the prices on the order.

Order

ItemPriceTaxTax rateTax collectedSubtotal
Wheat$10.00Wheat tax10%$1.00$11.00
Butter$10.00Butter tax5%$0.50$10.50
Total $20.00 $1.50$21.50

Payment table

AmountTax amount
$21.50$1.50

Payment tax rate table

Taxable amountTaxTax rate
$10.00Wheat tax10%
$10.00Butter tax5%

Tax report

Taxable amountTaxTax rateTax collected
Payments $10.00Wheat tax10%$1.00
$10.00Butter tax5%$0.50
Net $20.00 $1.50

Example 3: Two Default Taxes

Each item gets the same two taxes. The net taxable amount is NOT the sum of taxable amounts in the Payment tax rate table.

Order

ItemPriceTaxTax rateTax collectedSubtotal
Wrench$10.00Multnomah County5%$0.50$11.50
Oregon state10%$1.00
Hammer$10.00Multnomah County5%$0.50$11.50
Oregon state10%$1.00
Total$20.00$3.00$23.00

Payment table

AmountTax amount
$23.00$3.00

Payment tax rate table

Taxable amountTaxTax rate
$20.00Multnomah County5%
$20.00Oregon state10%

Tax report

Taxable amountTaxTax rateTax collected
Payments $20.00Multnomah County5%$1.00
$20.00Oregon state10%$2.00
Net $20.00 $3.00

Example 4: Two Items with Same Tax, One Item has a Special Tax

Both the items have the same tax rate, but one of the items has a special tax rate.

Order

ItemPriceTaxTax rateTax collectedSubtotal
Wrench$10.00Multnomah County5%$0.50$11.50
Wrench tax10%$1.00
Hammer$10.00Multnomah County5%$0.50$10.50
Total$20.00$2.00$22.00

Payment table

AmountTax amount
$22.00$2.00

Payment tax rate table

Taxable amountTaxTax rate
$20.00Multnomah County5%
$10.00Wrench tax10%

Tax report

Taxable amountTaxTax rateTax collected
Payments $20.00Multnomah County5%$1.00
$10.00Wrench tax10%$1.00
Net $20.00 $2.00

📘

NOTE

Since the Wrench tax does not apply to the Hammer item, the Wrench tax does not contribute to the Net amount in the Tax report.

Example 5: Items with Zero Tax or Merchants are Tax Exempt

Mark items with no tax as a 0% "No Tax Applied" tax. Merchants, such as nonprofits or schools, who are tax-exempt can remove tax from an order.

Order 1

ItemPriceTaxTax rateTax collectedSubtotalTax removed
Delivery charge$10.00No tax applied0%$0.00$10.00False
Hammer$10.00Multnomah County5%$0.50$10.50False
Total $20.00 $0.50$20.50False

Order 2

ItemPriceTaxTax rateTax collectedSubtotalTax removed
Delivery charge$10.00No tax applied0%$0.00$10.00False
Total $10.00$0.00$10.00False

Order 3 (Tax-exempt merchant)

ItemPriceTaxTax rateTax collectedSubtotalTax removed
Wrench$10.00---$10.00True
Hammer$10.00---$10.00True
Total $20.00 ---$20.00True

Payment table

AmountTaxTax amount
$20.00Multnomah County$0.50
$10.00Wrench tax$0.00

Payment tax rate table

OrderTaxable amountTaxTax rate
1$10.00Multnomah County5%
1$10.00No tax applied0%
2$10.00No tax applied0%

Tax report

Taxable amountTaxTax rateTax collected
Payments $10.00Multnomah County5%$0.50
$20.00No tax applied0%$0.00
$10.00Tax removed0%$0.00
Net $50.00$0.50

Example 6: VAT (Value Added Tax)

With VAT, an advertised price of the item includes the tax rather than adding tax to the order total at the time of payment. Clover saves the advertised price with VAT as the taxable amount.

For example, if a pair of socks is advertised in Ireland at €6 and the VAT is 20%, the customer pays the €6 and the merchant revenue is €5. The collected tax is €1 (€5 x 20%). Clover saves the advertised price of €6 and the 20% VAT value.

Order

ItemAdvertised priceRevenueTaxTax rateTax collectedSubtotal
Socks€6.00€5.00Ireland tax20%€1.00€6.00
Total €6.00 €1.00€6.00

Payment table

AmountTax amount
€6.00€1.00

Payment tax rate table

Taxable amountTaxTax rateTax paid
€6.00Ireland tax20%€1.00

Tax report

Taxable amountTaxTax rateTax collected
Payments €6.00Ireland tax20%€6.00
Net €6.00 €1.00

Example 7: VAT, Multiple Rates Per Item

Socks are advertised for €6. There are two VAT rates: 15% and 5%.

Calculation

  • Revenue = €6 ÷ (1 + 0.15 + 0.05) = €5
  • 15% tax = €5 x 0.15 = €0.75
  • 5% tax = €5 x 0.05 = €0.25
  • Total tax = €0.75 + 0.25 = €1.00

Order

ItemTaxTax RateSubtotal
Socks Ireland Tax15%€6
Dublin Tax5%
Total €6

Payment table

AmountTax Amount
€6€1.00

Payment tax rate table

Taxable AmountTaxTax RateTax Paid
€6.00Ireland Tax15%€0.75
€6.00Dublin Tax5%€0.25

Tax report

Taxable AmountTaxTax RateTax Collected
Payments€6.00Ireland Tax15%€0.78
€6.00Dublin Tax5%€0.29
Net€6.00€1.07

Example 8: Two Different Rate Objects with the Same Rate on the Same Order

A merchant has accidentally built their inventory using two 13.5% tax rate rows for the same tax and has assigned items to both tax rates.

The order Includes:

  • €4 bottle of water at a 13.5% rate #1
  • €4 espresso at a 13.5% rate #2

With two different rates on the same order, Clover combines subtotals for each tax entity and separately rounds on a lower subtotal for the items taxed at each rate. Since the merchant is in Ireland, a VAT is included.

The tax code assumes that these rates are for separate entities and the tax paid calculations are separate for the water and the espresso. If there was only one 13.5% rate, the line item prices would be combined as €8 before calculating the tax. So it would use a larger total which leads to less rounding.

Clover tax calculation

  • €4 at 13.5% rate #1 with the base price of €3.52 and €0.48 tax
  • €4 at 13.5% rate #2 with the base price of €3.52 and €0.48 tax

What the merchant expects
€8 at 13.5% with the base price of €7.05 and €0.95 tax

With two separate tax rates, there has to be more rounding, in this case, one more rounding up by one cent whereas there would be only one rounding with one tax rate.

Clover tax calculation

Order

ItemTaxTax RateSubtotal
WaterIreland Tax13.5%€4
EspressoIreland Tax (copy)13.5%€4
Total€8

Payment table

AmountTax
€8.00€0.96

Payment tax rate table
The system assumes that the tax rates should be calculated separately as they are separate entities.

Taxable AmountTaxTax RateTax Paid
€4.00Ireland Tax13.5%€0.48
€4.00Ireland Tax (copy)13.5%€0.48

Tax report

Taxable AmountTaxTax RateTax Collected
Payments €4.00Ireland Tax13.5%€0.48
€4.00Ireland Tax (copy)13.5%€0.48
Net€8.00€0.96

What the merchant expects

Order

ItemTaxTax RateSubtotal
WaterIreland Tax13.5%€4
ExpressoIreland Tax13.5%€4
Total €8

Payment table

AmountTax Amount
€8.00€0.95

Payment tax rate table

Taxable AmountTaxTax RateTax Collected
€8.00Ireland Tax13.5%€0.95

Tax report

Taxable AmountTaxTax RateTax Collected
Payments €8.00Ireland Tax13.5%€0.95
Net€8.00€0.95