Temporary Tax Rates Overview
Depending on your state or country, there may be times when your tax rates differ, or do not apply at all. For accurate historical reporting or if you have additional questions about what this means for your taxes, it is important to follow the guidance of your accountant or tax advisor.
Create Temporary Tax Rates
If you need detailed guidance on how to create a tax rate or where to review the rates you’ve set for your business, you can learn more here: Set Up Tax Rates and Adjust Tax Options
To create a temporary tax rate:
In Toast Web, navigate to Menus > Settings > Manage tax rates.
Select +Add Tax Rate.
Name your tax rate something clear and specific such as “Tax Rate Holiday-GST (0%)”
Set the rate to 0%, and complete all settings based on the guidance of your accountant or tax advisor.
Save and publish your changes.
Review Menu Structure for Temporary Tax Rates
To simplify the number of tax rate adjustments you will need to make to accommodate this proposed tax exemption period, you’ll want to review your menu structure. Within Toast POS, you are able to set your taxes on the item level for heightened specificity, or your items can inherit tax rates from the menu or menu group level if the items within the menu or menu group share the same tax rate.
Using current beverage-based restrictions within the Government of Canada’s proposed GST/HST Break as an example, you will need to separate your menu into menu groups based on beverage type such as Non-Alcoholic Beverages, Beer, Wine, Spirits, Cocktails, etc. You should further separate beverages within your spirits and cocktails lists by beverages with ABV higher than 7%, and beverages with ABV lower than 7%.
Adjust Tax Inheritance by Menu Group
Once you’ve confirmed that your menu items are properly categorized, you’ll next want to set the inheritance options on each menu group.
Navigate to Menus > Edit Menus.
Select the menu group you would first like to edit.
Navigate to the Taxes section of the menu group internal settings page, and find the setting, Inherit Tax Rates From Restaurant?. See image below.
Select No, specify tax rates here.
Under Applicable Taxes, select your new tax rate.
Save and publish.
Continue these steps for all menu groups that need adjustments to their tax rates during this sales tax holiday.
Note: For the alcoholic beverage tax rate exemption proposal, if the item’s ABV is lower than 7% you will set 0% HST or GST depending on province. If the item’s ABV is higher than 7%, no tax rate adjustments are needed, but you should still select “No, specify tax rates here” for these beverage options and ensure the accurate rate is selected under the Applicable Taxes list.
Frequently Asked Questions: Sales Tax Holiday
Can I leave my tax rate as configured and remove it from the items that are tax exempt during this sales tax holiday instead?
Yes, you can leave your rate as configured and remove it from the items that are tax exempt during this time, but depending on the number of items on your menu this is a much more time-consuming option to temporarily adjust your rates.
** Per the terms of the Merchant Agreement between you and Toast, you acknowledge and agree that Toast has no obligation to determine whether taxes apply to your business or transactions, or to calculate, collect, report, or remit any taxes to any tax authority arising from any payment. This content is provided for informational purposes and is not intended as legal, tax, HR or any other professional advice. Please contact an attorney or other professional for specific advice based on your unique circumstances.