These three scenarios explain how BQE CORE charges tax for time entries recorded against projects. The same applies to expense entries.
- Scenario 1: You are charging individual time entries for the same project at different item tax rates.
- Scenario 2: You are charging all time entries for the same project at the same named tax rate.
- Scenario 3: You are applying both item taxes and a named tax rate to time entries, so the item tax total is itself taxed again.
CORE provides you the option to exempt projects from item taxes (Tax 1/2/3) and also to exclude item taxes from a named tax rate's calculation. See the Tax Rates article for the full field reference.
- Scenario 1: You have applied different item tax rates to time entries for the same project. Let us assume you have entered 1 hour for each activity and $100 as Bill Rate for each entry.
Time entry with activity A; Tax 1 = 10% is charged
Time entry with activity B; two taxes are charged, Tax 1= 20% and Tax 2 = 30%
Time entry with activity C; three taxes are charged, Tax 1 = 10%, Tax 2 = 20% and Tax 3 = 30%
Activity A: 1 hour x $100 x 1.1 = $110
Activity B: 1 hour x $100 x (1.2 + 0.3) = $150
Activity C: 1 hour x $100 x (1.1 + 0.2 + 0.3) = $160
The resulting due amount on the invoice will be $300 service + $120 service tax = $420
CORE taxes each time entry individually. In addition, when there is more than one item tax, it sums them up before applying to the entry.
- Scenario 2: You have assigned a single named tax rate to the project and taxed all time entries at that rate. Let us assume you have entered 3 hours for activity and $100 as the Bill Rate for each entry, with no item taxes assigned.
Named tax rate "GST" = 10%, Tax Application = Invoice Total, Services
Activity: (3 hours x $100) x 1.1 = $330
The resulting due amount on the invoice will be $300 service + $30 GST = $330
CORE applies a named tax rate once, against the invoice's total service or expense amount, after computing the total labor amount. Named tax rates are defined once in the Tax Rates catalog (Settings > Billing & Invoices > Tax Rates) and assigned to clients and projects from there.
- Scenario 3: You have applied item taxes to time entries and also assigned a named tax rate to the project, and want the item tax total itself taxed again. Let us combine scenario 1 and 2. The individual time entries are taxed based on the activity's item taxes (Scenario 1) and then that total amount is taxed by the named tax rate (Scenario 2).
Activity A: 1 hour x $100 x 1.1 = $110
Activity B: 1 hour x $100 x (1.2 + 0.3) = $150
Activity C: 1 hour x $100 x (1.1 + 0.2 + 0.3) = $160
The resulting due amount on the invoice will be $300 service + $120 service tax = $420
Total Service + 10% named tax rate: $420 x 1.1 = $462
The resulting total due amount on the invoice will be $462.