Include Tax in Cost

On the Purchase Orders or Purchase Order Builder form, select the Include Tax In Cost check box if you want the purchase order to include tax in the cost of the items. Clear this check box if you do not want the purchase order to include tax in the cost of the items.

The Include Tax In Cost check box value defaults from the Vendors form. The check box is enabled if lines have not been added to the purchase order. After you add lines to the purchase order, the Include Tax in Cost check box becomes disabled.

The purchase order and associated line items must consist of either all line items having the tax included in the cost or not, depending on the Include Tax In Cost check box setting. The purchase order header and its associated line items must have the same Include Tax in Cost setting.

When you add a line item to Purchase Order Lines or Purchase Order Blanket Lines, the system displays a warning message if:

  • The item is not on the Vendor Contract Prices form.
  • The item's Include Tax In Cost check box on the Vendor Contract Prices form does not match the PO header's Include Tax In Cost setting.

You may change the item cost to include or eliminate the tax. The system will process the item based on the purchase order header selection of the Include Tax in Cost check box.

Note:  If the Include Tax In Cost is selected for the purchase order and the PO line contains a tax exempt item, the system does not deduct any taxes when calculating the item's final cost during voucher generation. You can manually adjust the cost of the item on the PO line, if necessary.

If the PO that is being received includes tax in cost, then the material cost entered during receiving includes the tax amount. During this process, the material cost that includes tax will be separated into material cost without tax amount and tax amount. The tax amount will be the tax on material cost based on Tax System 1 and Tax System 2 values.

On the History Purchase Orders form, the Include Tax In Cost check box defaults from the Purchase Orders form and is disabled.

On the Generate A/P Transactions form, the value of this field defaults from the setting on the original PO. When generating vouchers on the Generate A/P Transactions form, you cannot change the tax amount for a purchase order that has the Include Tax In Cost check box selected. The Generate A/P Transactions form Taxes tab does not display data for purchase orders that have Include Tax in Cost selected.