Tax calculation rounding errors

Devin

Hello, we apply both GST (5%) and PST (7%) for services provided on our invoices. We have several line items billed at half hour and when both taxes are applied, it would auto-calculate the taxes amount for that line items. The total taxes amount for all line items are off by several cents, which I assume is caused by lack of decimal places internally by Wave when it auto-calculate the total. Is there an option available to increase the number of decimal places for auto-calculation to match the calculated total done manually? Or as workaround, do I need to manually add adjustment line items to correctly show the total amount after tax? Thanks.

Barsin

Hi @Devin

When it comes to tax rounding at Wave, this process is completed on a line-item level. What this means is that each product line will calculate the tax, round to 2 decimal places, then do the next product line. At the end, it will add up all the line item tax calculations and plug that in as a total tax in your invoice. Unfortunately, there is no way around that in our software at this time.

As a potential temporary workaround, feel free to add/discount a new invoice item for $0.01 to charge the right amount and mark it as an adjustment entry for the time being.

Devin

Thanks @BarsinA . I have tried the workaround but it only affects the grand total and doesn't show the tax amounts correctly.

Instead I added in a note explaining the discrepancies and to pay that amount and not what was calculated by Wave. When our invoice got paid, the payee was looking at the total amount shown by Wave and not in the notes so this approach doesn't work.

I agree that tax(es) should be applied on a per line item level, where applicable, but rounding shouldn't be done until at the end.

In addition, why should we need to explain these discrepancies to provincial Ministry of Finance and Canada Revenue Agency (CRA) when we need to report/send tax money collected?

Ceelabb

Hi @Barsin

can you confirm how you suggest that this work around will calculate the correct tax.
if i add/discount a new invoice item for $0.01 to charge the right amount this doesn't change the vat or tax rate.

please help.

KiahD

Hey @Ceelabb,

The addition of a line item for (-)$0.01 is intended to edit the invoice total so that the correct amount is charged. It's not able to change the sales tax rate itself, rather manually edit the calculated total once the sales tax is applied.

Hopefully that makes things more clear!

Gabriel_Krozkin

Another "workaround" could be to round your initial revenue item (before taxes) to 2 decimals, so the rounding of wave will be the same as your calculation.
Hope this helps, It has worked for me!

Thanks.

Gabriel.