The tax setting controls whether GST/HST and PST/QST are added on top of your prices or already included in them. This article explains the difference, shows how the same sale works out under each setting, and covers where to change it.
Exclusive: tax is added on top of your prices
With Exclusive, the prices you enter on line items are before tax. ATB Invoicing calculates GST/HST and PST/QST on top and adds them to the total. Exclusive is the setting most businesses use, and it is the default for a new organization.
The totals panel shows each tax on its own row, such as Tax (GST/HST) (5%), and the Total is labelled (Tax exclusive).
Inclusive: tax is already in your prices
With Inclusive, the prices you enter already include tax. ATB Invoicing works backwards from your prices to find the tax portion. It does not add anything to the total. This setting suits businesses that quote tax-in prices, such as a flat $1,050.00 job.
The Total is labelled (Tax included), and lines such as Includes GST/HST 5% appear under the total to show how much of it is tax.
Worked example
Northwind Landscaping in Alberta does a job and charges 5% GST.
| Exclusive | Inclusive | |
|---|---|---|
| Line item price you enter | $1,000.00 | $1,050.00 |
| GST (5%) | $50.00 added | $50.00 included |
| Total the customer pays | $1,050.00 | $1,050.00 |
The customer pays the same amount in both cases. The difference is which number you type in.
The same works with two taxes. In British Columbia, with 5% GST and 7% PST, an inclusive price of $1,120.00 breaks down to $1,000.00 before tax, $50.00 GST and $70.00 PST. An exclusive price of $1,000.00 produces the same $1,120.00 total.
Note. When ATB Invoicing extracts tax from an inclusive price, the result is rounded to the cent. When both GST/HST and PST/QST apply, any leftover cent goes to PST/QST.
Where the setting comes from
Every new invoice and quote starts with a tax setting chosen in this order:
- The customer's own Tax Calculation setting, in the Default Settings card on the customer's page.
- Your organization's Tax Calculation setting, in Business Details under Manage Organization.
A customer set to Use organization default follows your organization setting. Changing either setting applies to new invoices and quotes only. Documents you have already created keep their setting.
Change the setting on one invoice or quote
- Open the draft invoice or quote.
- Click the details summary at the top of the form (the area showing the number, dates and Tax Setting). The Edit Details window opens.
- Under Tax Setting, select Inclusive or Exclusive.
- Click Save.
The choice applies to this document only and does not change your organization defaults.
Tip. The Tax Setting options stay greyed out until a tax is turned on. Add GST/HST or PST in the totals panel, or tick Add tax on a line item, and then choose the setting.
When the setting is locked
You can change the tax setting only while an invoice or quote is a Draft. Once you send it, the setting is locked so that the totals match what your customer received. If the setting is wrong on a sent document, void it and issue a new one.
When a customer accepts a quote, the invoice created from it keeps the quote's tax setting, whatever your current defaults are.
