Tax Rates

Available tax rates for a business.

Overview

Accounting service providers are usually pre-configured with a set of tax rates available in the business' country of operations. A business can modify those tax rates accordingly as well. This makes it easier to apply rates without having to remember them.

Some tax rates are a result of multiple sub-taxes. Railz refers to those as components. For example, a Canadian business in British Colombia is charged a tax rate called "GST/PST tax (12%)" that has two components:

  • A GST tax of 5%.
  • A PST tax of 7%

Data Model

Field

Type

Description

id

string

Identifier for the tax rate, unique to the business in the accounting service provider.

name

string

Name of the tax rate in the accounting service provider.

code

string

Code for the tax rate in the accounting service provider.

effectiveTaxRate

decimal

See effective tax rates.

totalTaxRate

decimal

Total sum of the components of a tax rate.

components

array

An array of tax components.

sourceModifiedDate

string
See Date

Date the record was last changed in the accounting service provider.

Tax Components

Field

Type

Description

name

string

Name of the tax rate component.

rate

decimal

The rate of the tax rate component, usually a percentage.

isCompound

boolean

See effective tax rates.

Effective Tax Rate

If a tax rate has multiple components, the total tax is calculated based on the sum-product of each rate and the original amount. Alternatively, one can calculate the tax based on the subtotal of the original amount plus another tax, also known as compounding. When compounding is used, the effective tax rate is the rate that, if applied to the original amount, would result in the total amount of the tax with compounding.

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Compounded Tax Rate Example

A sales tax has two components that have a rate of 5% and 7%, and one component is a compound. Assuming an invoice with a total amount of $100, the effective rate can be calculated as follows:

  • GST (5%) = $5
  • Subtotal with GST = $105
  • PST (7%) = $7.35
  • Total = 112.35

In this case, there is a total tax rate of 12% but an effective tax rate of 12.35%.

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For QuickBooks Online, the effective and total rates are the same because the total tax rate is a sum of the component rates.

Tax Rate Reference

Data types that reference a tax rate, for example, invoice and bills, use an taxRateRef that includes the id and name of the linked tax rate.

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Using Tax Rate Reference in Push

For convenience, when pushing data taxRateRef can be used alone with the id as a value instead of nesting it within.

When pushing to Xero, use code as a value.

Example Data

{
  "data":
  [
    {
      "id": "1",
      "name": "Sales tax",
      "code": "130",
      "effectiveTaxRate": 12.35,
      "totalTaxRate": 12,
      "components":
      [
        {
          "name": "GST",
          "rate": 5,
          "isCompound": false
        },
        {
          "name": "PST",
          "rate": 7,
          "isCompound": true
        }        
      ],
      "sourceModifiedDate": "2021-03-10T11:26:06.619Z"
    }
  ]
}

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