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

Item

Price

Tax

Tax rate

Tax collected

Subtotal

Wrench

$10.00

Multnomah County

5%

$0.50

$10.50

Hammer

$10.00

Multnomah County

5%

$0.50

$10.50

Total

$20.00

$1.00

$21.00

Payment table

Amount

Tax amount

$21.00

$1.00

Payment tax rate table

Taxable amount

Tax

Tax rate

$20.00

Multnomah County

5%

Tax report

Taxable amount

Tax

Tax rate

Tax collected

Payments

$20.00

Multnomah County

5%

$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

Item

Price

Tax

Tax rate

Tax collected

Subtotal

Wheat

$10.00

Wheat tax

10%

$1.00

$11.00

Butter

$10.00

Butter tax

5%

$0.50

$10.50

Total

$20.00

$1.50

$21.50

Payment table

Amount

Tax amount

$21.50

$1.50

Payment tax rate table

Taxable amount

Tax

Tax rate

$10.00

Wheat tax

10%

$10.00

Butter tax

5%

Tax report

Taxable amount

Tax

Tax rate

Tax collected

Payments

$10.00

Wheat tax

10%

$1.00

$10.00

Butter tax

5%

$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

Item

Price

Tax

Tax rate

Tax collected

Subtotal

Wrench

$10.00

Multnomah County

5%

$0.50

$11.50

Oregon state

10%

$1.00

Hammer

$10.00

Multnomah County

5%

$0.50

$11.50

Oregon state

10%

$1.00

Total

$20.00

$3.00

$23.00

Payment table

Amount

Tax amount

$23.00

$3.00

Payment tax rate table

Taxable amount

Tax

Tax rate

$20.00

Multnomah County

5%

$20.00

Oregon state

10%

Tax report

Taxable amount

Tax

Tax rate

Tax collected

Payments

$20.00

Multnomah County

5%

$1.00

$20.00

Oregon state

10%

$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

Item

Price

Tax

Tax rate

Tax collected

Subtotal

Wrench

$10.00

Multnomah County

5%

$0.50

$11.50

Wrench tax

10%

$1.00

Hammer

$10.00

Multnomah County

5%

$0.50

$10.50

Total

$20.00

$2.00

$22.00

Payment table

Amount

Tax amount

$22.00

$2.00

Payment tax rate table

Taxable amount

Tax

Tax rate

$20.00

Multnomah County

5%

$10.00

Wrench tax

10%

Tax report

Taxable amount

Tax

Tax rate

Tax collected

Payments

$20.00

Multnomah County

5%

$1.00

$10.00

Wrench tax

10%

$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

Item

Price

Tax

Tax rate

Tax collected

Subtotal

Tax removed

Delivery charge

$10.00

No tax applied

0%

$0.00

$10.00

False

Hammer

$10.00

Multnomah County

5%

$0.50

$10.50

False

Total

$20.00

$0.50

$20.50

False

Order 2

Item

Price

Tax

Tax rate

Tax collected

Subtotal

Tax removed

Delivery charge

$10.00

No tax applied

0%

$0.00

$10.00

False

Total

$10.00

$0.00

$10.00

False

Order 3 (Tax-exempt merchant)

Item

Price

Tax

Tax rate

Tax collected

Subtotal

Tax removed

Wrench

$10.00

$10.00

True

Hammer

$10.00

$10.00

True

Total

$20.00

$20.00

True

Payment table

Amount

Tax

Tax amount

$20.00

Multnomah County

$0.50

$10.00

Wrench tax

$0.00

Payment tax rate table

Order

Taxable amount

Tax

Tax rate

1

$10.00

Multnomah County

5%

1

$10.00

No tax applied

0%

2

$10.00

No tax applied

0%

Tax report

Taxable amount

Tax

Tax rate

Tax collected

Payments

$10.00

Multnomah County

5%

$0.50

$20.00

No tax applied

0%

$0.00

$10.00

Tax removed

0%

$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

Item

Advertised price

Revenue

Tax

Tax rate

Tax collected

Subtotal

Socks

€6.00

€5.00

Ireland tax

20%

€1.00

€6.00

Total

€6.00

€1.00

€6.00

Payment table

Amount

Tax amount

€6.00

€1.00

Payment tax rate table

Taxable amount

Tax

Tax rate

Tax paid

€6.00

Ireland tax

20%

€1.00

Tax report

Taxable amount

Tax

Tax rate

Tax collected

Payments

€6.00

Ireland tax

20%

€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

Item

Tax

Tax Rate

Subtotal

Socks

Ireland Tax

15%

€6

Dublin Tax

5%

Total

€6

Payment table

Amount

Tax Amount

€6

€1.00

Payment tax rate table

Taxable Amount

Tax

Tax Rate

Tax Paid

€6.00

Ireland Tax

15%

€0.75

€6.00

Dublin Tax

5%

€0.25

Tax report

Taxable Amount

Tax

Tax Rate

Tax Collected

Payments

€6.00

Ireland Tax

15%

€0.78

€6.00

Dublin Tax

5%

€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

Item

Tax

Tax Rate

Subtotal

Water

Ireland Tax

13.5%

€4

Espresso

Ireland Tax (copy)

13.5%

€4

Total

€8

Payment table

Amount

Tax

€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 Amount

Tax

Tax Rate

Tax Paid

€4.00

Ireland Tax

13.5%

€0.48

€4.00

Ireland Tax (copy)

13.5%

€0.48

Tax report

Taxable Amount

Tax

Tax Rate

Tax Collected

Payments

€4.00

Ireland Tax

13.5%

€0.48

€4.00

Ireland Tax (copy)

13.5%

€0.48

Net

€8.00

€0.96

What the merchant expects

Order

Item

Tax

Tax Rate

Subtotal

Water

Ireland Tax

13.5%

€4

Expresso

Ireland Tax

13.5%

€4

Total

€8

Payment table

Amount

Tax Amount

€8.00

€0.95

Payment tax rate table

Taxable Amount

Tax

Tax Rate

Tax Collected

€8.00

Ireland Tax

13.5%

€0.95

Tax report

Taxable Amount

Tax

Tax Rate

Tax Collected

Payments

€8.00

Ireland Tax

13.5%

€0.95

Net

€8.00

€0.95


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