If you charge your customers sales tax, such as VAT or GST, add each rate in Avaza once. You can then pick it on invoice, estimate, expense and bill lines, and see your totals in the Tax Summary report. If you're not sure which taxes apply in your country, ask your accountant.

Only Administrators and Finance Managers can manage taxes. Go to Settings › Tax. The Taxes page lists each tax with its Tax Rate, and Count of Items: how many inventory items use it as their sales tax. New accounts start with one tax, "No Tax", at 0%.

Add a tax

  1. Click Add Tax.

  2. Enter a Name, such as GST or VAT 20%. This is the name your customers see on invoices, so keep it short: up to 20 characters. Each tax needs a different name.

  3. Enter a Description, such as Goods & Services Tax, of up to 50 characters. The Tax Rate list on invoice lines shows the description.

  4. Enter the Percent, for example 10.

  5. If you send e-invoices, choose the E-Invoice Category, such as standard, zero-rated or exempt. This field only appears when e-invoicing is set up. See getting started with e-invoicing.

  6. Click Save.

Invoice lines for Fernleaf Media with a Tax Rate column showing Goods & Services Tax on each line

Taxes with several components

Most regions use a single rate. If your tax is made up of parts, for example a federal and a regional rate, add them as components of one tax:

  1. In the Tax Details popup (Add Tax, or click an existing tax), click Show advanced.

  2. Under Tax Components, fill in a Code, a Name and the Tax % for the first part. Codes can have up to 20 characters, names up to 50.

  3. Click Add Component for each further part. Click the × at the end of a row to remove it.

  4. Tick Compound on one component if it's charged on the amount plus the other components. Only one component can be compound.

  5. Check the totals and click Save.

Total Tax Rate adds up the components. Effective Tax Rate is the rate Avaza charges, including the compound effect. For example, a 10% component and a 5% compound component give a Total Tax Rate of 15% and an Effective Tax Rate of 15.5%. Once a tax has several components, its Percent field is greyed out: edit it in the advanced view.

Your invoice template decides how the tax shows on invoices. In Settings › Invoice & Bill Settings, open a template's Layout tab and choose How are Tax Totals Displayed?: Single Tax Subtotal, All Tax Rates, All Tax Component Rates, Non 0% Tax Rates, Non 0% Tax Components or Don't display tax. See invoice and estimate templates.

An invoice template's Layout tab, with How are Tax Totals Displayed? set to All Tax Component Rates

Where each tax is used

  • Inventory items carry a default tax, which fills in the Tax Rate when you add the item to an invoice. Set it in Settings › Inventory Items. See managing inventory items.
  • Invoice, estimate, credit note and bill lines each have their own Tax Rate, which you can change before you save.
  • Expenses record the tax on each receipt.

Each invoice also has an Amounts are setting, which decides whether your prices include tax. See tax inclusive and tax exclusive amounts and how tax is calculated. For invoices with no tax for foreign business customers, see reverse charge invoices.

Change or delete a tax

Click a tax in the list to change it. If you change its rate:

  • saved invoices and estimates keep their tax amounts until you edit and save them again;
  • recurring invoices and recurring expenses that use the tax are updated to the new rate straight away.

To keep past invoices and reports as they were, add a new tax for the new rate instead of editing the old one. See when a tax rate changes.

To delete a tax, open it and click Delete Tax, then confirm. You can't delete a tax that's in use by an inventory item, invoice, estimate, credit note, bill, expense, recurring invoice, retainer subscription or recurring expense. Avaza tells you where it's used, for example "Cannot delete tax as it is currently referenced in Invoices".