Tax Rate and Tax Rate Components
Overview
Tax Rate objects allow you to track and manage tax amounts throughout your system.
In Rose Rocket, the Tax Rate object, comprised of Tax Rate Components, is connected to a Financial Line Item object. It is typically used for invoices and bills. A Tax Rate object requires at least a Tax Rate Component object connection. A Tax Rate Component object should not be created without a connected Tax Rate object.
API Configuration
When using the API to make requests, refer to the following pages detailing the process. These guides walk through the requirements and setup to access the Rose Rocket API with your application.
- Authentication - Access Rose Rocket with OAuth 2.0
- Object operations - Configure your requests
Tax Rate Object Structure
Use the table below for information about the taxRate object.
| Fields | Label | Type | Description |
|---|---|---|---|
id | ID | string | Global unique identifier for record |
fullId | Full ID | string | User identified record ID |
name | Name | string | Name of the tax rate (e.g., Sales Tax (10%)) |
effectiveTaxRate | Effective Tax Rate | integer | Total amount of tax with compounding applied to the original amount |
internalStatus | Status | string, enumerated | Status associated with this tax rate. Valid values are: active, archived. Defaults to active, cannot be null. |
sourceType | Source Type | string, enumerated | Creation origin of the tax rate (i.e., how this object was created). Valid values are: manual, codatQbo, test. Tax Rate objects created via our API should have this field set as manual. |
lastUpdatedAt | Effective Tax Rate Last Updated At | date | Date time when the effective tax rate or tax name was last modified from the accounting integration or manually |
taxRateComponents | Tax Rate Components | Tax Rate Component connected object(s) array. This connection is required for a tax rate object to function properly in the Rose Rocket system. See Tax Rate Component structure below. | Individual Tax Components (e.g., GST: 7%, HST: 6%) of this Tax Rate object |
type | Tax Rate Type | string, enumerated | Type of financial document the rate should be applied to. Valid values are: Invoice, Bill, CreditNote, BillCreditNote. |
Tax Rate Component Object Structure
A Tax Rate object can be comprised of multiple sub-taxes which are the Tax Rate Components. For example, a financial line item may be charged a tax rate called the Ontario Harmonized Sales Tax (HST) at 13% (Tax Rate object) which have the 2 following components: Federal GST at 5% and Retail Sales tax at 8% (both are Tax Rate Component objects).
If a Tax Rate object only has a single component, then the effective tax rate of the Tax Rate object would match the rate of the only Tax Rate Component it is connected to.
Use the table below for information about the taxRateComponent object.
| Fields | Label | Type | Description |
|---|---|---|---|
id | ID | string | Global unique identifier for record |
fullId | Full ID | string | User identified record ID |
name | Name | string | Name of the tax rate component (e.g., ON HST (15%)) |
rate | Rate | integer | Numerical value of the tax rate (e.g., 15) |
isCompound | Is Compounded | boolean | A flag to indicate whether the tax is calculated using the principle of compounding. See Tax Compounding section below. |
Tax Compounding
If you have multiple tax components or sub tax rates applied to a transaction (e.g., federal tax, provincial tax), tax compounding may apply. In some cases, each tax is calculated separately based on the original amount. But in compounding, one tax is applied to the subtotal, which includes the amount plus the other taxes.
Example to illustrate the principle of compounding
A Tax Rate X has two tax rate components. Tax Rate Component A has a rate of 5% while Tax Rate Component B has a rate of 10%.
In a non-compounding scenario, each tax would be calculated based on the original amount:
If the original amount is $100:
Tax A: $100 * 5% = $5
Tax B: $100 * 10% = $10
Total Tax = $5 + $10 = $15
In a compounding scenario where Tax B is compounded, one tax is calculated on top of the other:
Tax A: $100 * 5% = $5
Tax B on the subtotal: ($100 + $5) * 10% = $10.50
Total Tax = $5 + $10.50 = $15.50
The effective tax rate is the single percentage that would produce the total tax if applied to the original amount. In this example:
The effective tax rate would be the percentage that, when applied to $100, gives you $15.50.
Effective tax rate = $15.50 / $100 = 15.5%
How tax compounding is captured in Rose Rocket
In the example above, Tax Rate X would store the effective tax rate as effectiveTaxRate: 15.5 on a Tax Rate object and it would be connected to Tax Rate Component A and Tax Rate Component B. Tax Rate Component A would have rate: 5 and isCompound: false since the rate is applied on the original amount. Tax Rate Component B would have rate: 10 and isCompound: true since the rate is applied on the subtotal amount (original amount + other taxes). Note that Rose Rocket does not currently enforce compounding calculations therefore tax rates are assumed to already be properly calculated once entered into the system.
Updated 2 months ago