Taxes Overview

Taxes Overview

Overview

Rental Car Manager (RCM) allows for the automatic calculation of tax fees on any booking made in your system.  You are able to specify what booking fees tax applies to, and how it applies. There are various system setup rules and parameters that control this.

Most of the sales reports in RCM will exclude the tax fees from the total revenue, and tax fees will display differently on your customer facing documents. As such, it is important to understand how the tax calculations apply. The following article outlines this.

Setting Up Taxes

Within RCM, each location is set up against a specific state, and each state is set in a specific country. Therefore, this links each location to a state and a country, and any tax rates that are set up against them.

To set up or update Country Tax, go to System Setup >> State/Province >> Country. Any existing Country Tax rates and their name will be displayed in this table. For information on how to add and update these tax records, please see the Country List article. 
If there is a Country Tax set up, then any booking with a pickup location in this country will have this tax automatically applied. 


To set up or update State Tax, go to System Setup >> State/Province. Any existing State Tax rates and their name will be displayed in this table. For information on how to add and update these tax records, please see the States / Provinces article. 
If there is a State Tax set up, then any booking with a pickup location in this state will have this tax automatically applied. 


If a booking's pickup location is in a state and a country that both have a tax rate, then both taxes will apply. 

Please Note: When you set up tax records, the Tax Name is what will appear against tax charges on bookings and customer facing documents.

What Tax Applies To

If there are tax rates applying to its pickup location, then the booking will have this tax calculated in the following way:
  1. Rental Rates: Tax will always be applied to the rental rate.
  2. KMs Charges: Tax will always be applied to KMs charges, both the daily charges and any fee for additional KMs.
  3. Fuel Charges: There is a system parameter that controls whether tax is taken on fuel charges. It can be accessed by going to System Setup >> System Parameters >> Miscellaneous Parameters and it is called "Apply sales tax on fuel charge." If this is set to Yes, tax will be applied to fuel charges, and if it is set to NO, tax will not be applied. 
  4. Extra Fees - When each extra fee is set up, you can specify whether or not tax will apply to them using the "Apply Sale Tax" and "Apply State Tax" fields. For more information on extra fees, please see the Extra Fees article. 
  5. Insurance - Similarly to Extra Fees, each insurance option can be specified to or to not "Apply Sale Tax" and "Apply State Tax". For more information on this, please see the Insurance Fees article. 

Inclusive or Exclusive

Depending on how your rates and fees are set up, the tax may either be included in the price, or charged separately. In RCM this can be controlled by setting Sales Tax to be Inclusive or Exclusive. 

When the tax is Inclusive, the booking total is the cost of all listed fees, as the cost of the tax in already included in the prices
      e.g If the tax rate is 10% and the rental rates are $110, the booking total will be $110 with a note saying $10 of tax are included in the price
On customer facing documents, the tax price will appear as an additional line under the Total Cost of rental


When Tax is Exclusive, the total is the cost of all the listed fees and the tax on top of these fees. 
      e.g. If the tax rate is 10% and the rental rates are $110, the booking total will be $121 with an additional tax fee of $11. 
On customer facing documents, the tax price will appear as an extra fee


Please contact support@rentalcarmanager.com for more information on how to set tax as Inclusive or Exclusive. 

Charging State Tax and County Tax

If you have both State and Country Tax rates set up in your system, and you have locations which use both, you can control how these taxes interact with each other.

By default, Country Tax is charged on State Tax. 
      e.g. If there is a State Tax rate of 20% and a Country Tax rate of 10%:
            A booking that costs $100, will have a $20 State Tax charge and $12 Country Tax charge for a total of $132.
However, if you contact support@rentalcarmanager.com, we can switch it so that State Tax does not have Country Tax applied to it, and the two are calculated independently. 
      e.g. If there is a State Tax rate of 20% and a Country Tax rate of 10%:
            A booking that cost $100, will have a $20 State Tax charge and a $10 Country Tax charge for a total of $130.

Excluding Tax Charges from Bookings

Due to the way they control their billing and accounting, some companies may not want to have taxes charged on their bookings. As such, when you set up a Customer Company in RCM, you can specify whether or not they should be charged Sales Tax. 

To control this, go to Reservations >> Customer Maintenance >> Company, then when you add or update a Company record, take note of the "Charge Sales Tax" flag. 
Any bookings made against a company with this flag set to:
  1. Yes will have tax applied in the normal way
  2. No will have no tax charged on their booking
For more information, please see the Company article. 




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