#mounir
tacit burrow
Hi đź‘‹ can you elaborate on what you mean by charging tax on application fees? My thinking there is that you would need to determine the amount of tax that you need to charge, if any, beforehand and reflect that in the application fee that you charge the connected account.
As far as I know there are not prebuilt receipts regarding the fees you charge your connected, and believe you would need to build those from the information you have about the fees you're charging.
wheat timber
As an example:
Our merchant sells a $100 item
We use Stripe tax, and in Ontario we add 13% sales tax
So we charge the customer (using a PaymentIntent) $113
At the same time, we create a Tax Transaction for the merchant, for the $13 of tax they need to remit.
However, with Stripe connect, you can take an application fee.
So we want to take a 10% fee, and as such, take $11.30.
This is tax inclusive
So do we now need to create a second tax transaction in the opposite direction for $1.30? Or should we have included this in the initial calculation? The merchant will need to know about the tax on the fee we took in order for remit their taxes correctly.
It appears the application_fee parameter on the payment intent does not handle this for us.
tacit burrow
I would recommend aligning with your tax advisor on how you need to handle tax calculations here. We can help with figuring out how to structure those within the Stripe ecosystem, but we can't provide guidance on when you do/don't need to collect taxes and how much those are if so.
My gut reaction is that charging the application fee based on the total (subtotal + tax) is not correct, and that you would instead assess the application fee on just the subtotal, but I think your tax advisor would be best suited to provide you with a definitive answer there.
wheat timber
You’re right, sorry.
We know, in this case, that we need to collect HST on the application fee, and I poorly explained that step.
Our application fee is 10% * $100 (the “pre-tax amount”) + 13% tax. Which works out to be $11.30.
So while we know we are charging the correct amount of tax here; it’s unclear how we report this $1.30 of tax we charged on the application fee to Stripe such that the connected account is aware of it.
Otherwise, it looks like they made $100 + HST of revenue, minus $11.30 that we took. But it is not clear how much tax we applied on the application fee for them to add to their accounting software
tacit burrow
Hm, offhand, I don't think you need to tell Stripe about this, I think you need to tell your Connected Accounts about this. Checking to see if my teammates have heard of flows like this.
wheat timber
thank you
whole stratusBOT
tacit burrow
Yeah, I'm not finding anyone else who is familiar with this type of flow being built. Our understanding, is that if the tax liability for the application fee for your Connected Accounts needs to be tracked and exposed to them, then that is functionality that you will need to custom build.
wheat timber
That's what I thought based on our discussion so far.
Thank you very much for your time
BTW how can we become part of the beta API for tax registration for connected accounts?
tacit burrow
I'm not sure I'm familiar with the beta you're referring to. If you see that beta mentioned within our documentation, then I would suggest looking on that page for either an email address to reach out to, or a field where you can provide your email address so our teams can contact you if the beta is expanded.