Applying Discount and Tax error in total sale

instinct-ray commented 10 years ago

Tested in WPEC 3.8.14.3.

Here's the test case.

Tax is 10% Discount is 10% (from coupon) Item cost is $100

Right now if I were to purchase this item, The sale would be $100.

However, it should work like such. Item cost $100 Item cost after discount : $100 - $10 = $90 Item cost INCLUDING tax = $90 + ( $90 * 10%) = $99

Thank you, Ray

todd1 commented 10 years ago

Proper calculation for USA sales should be : TOTAL = Subtotal - discount + shipping * Tax

jbeales commented 9 years ago

+1 for me: Tax should be calculated on the subtotal - discount, as instinct-ray and todd1 say. I've received a complaint about this.

Is this already being looked at for 4.0, or should I try to push it through?

Also, are there other regions of the world where the tax should be calculated on the pre-discount price?

JustinSainton commented 9 years ago

Sure, definitely worth taking another look at. This is where we calculate total prices and this is where we calculate total tax

You'll see in both of those areas that we have made some recent changes, which may have resolved the issues. Take a look, if you like, @jbeales, as I don't think anyone else is heading up the charge here.

Thanks!

jbeales commented 9 years ago

Sounds good, thanks for the pointers to the right places in the code.

This change would be a breaking change. Should we have a setting, or at least a filter, to allow people to keep the old behaviour?

On Mon, Jan 26, 2015 at 4:30 PM, Justin Sainton notifications@github.com wrote:

Sure, definitely worth taking another look at. This is where we calculate total prices https://github.com/wp-e-commerce/WP-e-Commerce/blob/master/wpsc-includes/cart.class.php#L823 and this is where we calculate total tax https://github.com/wp-e-commerce/WP-e-Commerce/blob/1b45c7ba40234b9e34b1c9db673e35ce1b23518d/wpsc-taxes/controllers/taxes_controller.class.php#L90-L102

You'll see in both of those areas that we have made some recent changes, which may have resolved the issues. Take a look, if you like, @jbeales https://github.com/jbeales, as I don't think anyone else is heading up the charge here.

Thanks!

— Reply to this email directly or view it on GitHub https://github.com/wp-e-commerce/WP-e-Commerce/issues/1541#issuecomment-71542208 .

JustinSainton commented 9 years ago

Can we elaborate on what exactly would be breaking?

jbeales commented 9 years ago

The way tax is calculated when there's a coupon present, for tax exclusive pricing, would change from, (pseudo-code):

$tax = $subtotal * $taxrate;
$total = ($subtotal - $coupons) + $tax + $shipping;

to:

$subtotal = $subtotal - $coupons + $shipping;
$tax = $subtotal * $taxrate;
$total = $subtotal + $tax;

So anyone who relies on the calculation behaving as it does today will have a store that doesn't calculate tax the way they, (and perhaps their tax laws), expect it to.

I realize that there's a setting in the store to choose whether tax is charged on shipping, it has been eliminated from the pseudo-code above for simplification

mihaijoldis commented 9 years ago

Just tested something today. Tax to country set to 24%, price 50. If using a coupon that has 100% discount (free checkout) customer still has to pay the tax 12$. Not sure if coupon should apply to tax or not

jbeales commented 9 years ago

At the moment it's set to not, and I don't think there's a way to change it. In real life it seems to depend - sometimes the before-discount price is taxed, (like we currently do), and sometimes the discounted price is taxed, (like I want to do).

On Tue, Jan 27, 2015 at 6:24 PM, Joldis Mihai Alexandru < notifications@github.com> wrote:

Just tested something today. Tax to country set to 24%, price 50. If using a coupon that has 100% discount (free checkout) customer still has to pay the tax 12$. Not sure if coupon should apply to tax or not

— Reply to this email directly or view it on GitHub https://github.com/wp-e-commerce/WP-e-Commerce/issues/1541#issuecomment-71750466 .

benhuson commented 9 years ago

Looking at the UK rules, this would seem like you would tax the discounted price, not the original price. https://www.gov.uk/vat-businesses/discounts-and-free-gifts

I'm not sure how these rules vary country-to-country

JustinSainton commented 9 years ago

I think that's a sane default, @benhuson.

ghost commented 9 years ago

Hey @JustinSainton -

Any word on the 4.x release date?
The taxing calculation that @jbeales mentioned back on January 26th, has started to become a big issue for our client and we were hoping there'd be a little more chatter about a potential release date.

Thanks!

jbeales commented 9 years ago

@drewBlueEarth This is on my to-do list to fix, but I haven't done it yet. I'm hoping I'll get it done before 4.0, or if I don't someone else will. My client has avoided this since January simply by not offering any coupons, but that's not a viable long-term solution.

JustinSainton commented 9 years ago

@drewBlueEarth Sorry to hear that this is a pain point for you as well. I'll bump up the priority on the ticket for 4.0 to do everything we can to make sure it gets in.

Ultimately, we need to make sure that if we're changing the way things work, we provide a very clear way for people to revert the behavior. That's important, which @jbeales has noted. And second, the ticket needs someone to own it, and it sounds like @jbeales is up for it, which is awesome. The big feature for 4.0 is the new theme engine, which I am hard at work on. I imagine we'll have a beta for 4.0 out within the next 3 weeks or so. Depending on how that goes, a release is likely within the next 4-6 weeks.

Hope that is helpful!

jbeales commented 9 years ago

I'll own it. My client wants this changed, and if it doesn't happen in 4.0 I'm probably going to have to take advantage of that wpsc_calculate_total_price filter or something, and fixing the problem is easier.

For a way to revert the behaviour, is a filter enough, or should it be a setting? Do we have a way of knowing how many people actually like the current setup?

JustinSainton commented 9 years ago

@jbeales Knowing how many people depend on it in it's current form would be tricky, but because it's something we haven't heard loads of complaints about, it's hard to say.

That said, I think we're all in agreement, this is the way that makes the most sense.

I think a filter is enough. Let's make sure this is in the beta release and then we can release a blog post on the site clearly communicating the changes and how to revert them. In my mind, reverting the behavior should be as simple as someone adding this to their functions.php file: add_filter( 'wpsc_calculate_tax_on_discounts', '__return_true' ).

Thoughts on that?

jbeales commented 9 years ago

That's exactly what I was expecting to do.

JustinSainton commented 9 years ago

@jbeales That's because you're awesome.

ghost commented 9 years ago

@jbeales yeah... that definitely won't work for our client either (not offering coupons / discounts). Thanks guys, I appreciate the traction on this.

JustinSainton commented 9 years ago

@jbeales any traction here?

jbeales commented 9 years ago

Notes on GST (Canada's national sales tax): http://www.cra-arc.gc.ca/E/pub/gp/rc4022/rc4022-e.html#P1462_133649

jbeales commented 9 years ago

This is turning into a bigger animal than expected. I'll push changes to this branch in my fork until it's ready for reintegration here.

Edited to change link to the correct branch

johnfotios commented 9 years ago

Any updates on this? In the UK you always apply tax (VAT) after discounted amount. I made some edits to cart.class.php in the plugin (I really need this working before Black Friday so temporary edits to the plugin are necessary).

I have addeded:

        $vat = ( $subtotal - $coupons_amount) / (100) * (20);
        $total = ( $subtotal - $coupons_amount + $vat );

I don't need shipping. Just - discounts then + 20% tax.

This works exactly as I want, it shows the correct price. However, I had to switch off tax in the store settings, the new $total isn't what's sent to PayPal and the email sent to the customer after purchase doesn't show my new tax (obviously).

I can't see many topics about this, which is odd, because surely every UK shop running WPEC will need this.

johnfotios commented 9 years ago

Reverted to a quick fix I found, on line 101 taxes_controller.class.php, commented out: $total_tax -= $coupon_tax;, so I simply 'un-commented it' out. Works okay now - showing correct tax and carrying it through to PayPal.

I have no idea how it works, but could a toggle be applied to the line in the back end?

jbeales commented 9 years ago

Hi @johnfotios - I'm surprised too that there isn't more outcry about this, but for some reason there isn't. I doubt I'll get this fixed before Black Friday, but it looks like you've found the right thing to un-comment to get you through this weekend. When this does get fixed it'll be a bit more robust.

johnfotios commented 9 years ago

I was certainly expecting more posts about this - hopefully if anyone has the same issue they'll find this topic and be able to sort it as a temporary fix. Great plugin, by the way.

jbeales commented 8 years ago

I just read through the Canadian tax document linked above and it looks like there are several kinds of valid coupons in Canadian tax law:

Reimbursable coupons: These are coupons issued by a manufacturer and give the customer a dollar amount off of their purchase. According to Canadian law these are supposed to be deducted after the tax is applied. These are not likely to come up in our context, but they might, and if you read on you'll see that other coupons behave the same way.
_Non-Reimbursable coupons that include tax:_ From the customer's perspective these are identical to Reimbursable coupons, except they're issued by the merchant. This is pretty much how WPeC works right now, (with the possible exception of shipping). These are generally a dollar amount, but I don't think they have to be.
_Non-Reimbursable coupons that do not include tax:_ These are the ones that so many of us are looking for, where the calculation is ( subtotal - coupon ) * tax_rate. They are either percentages or dollar amounts.
Gift Certificates: Not really coupons, but it's worth mentioning that they would be applied exactly like items 1 and 2.

Since both applying the coupon before or after the tax is calculated, and Canadian merchants, (and probably many others), have the option of using both kinds of coupons at the same time, I think the best way to solve this is to add an option to the coupons themselves to specify how that coupon should be applied.

Thoughts?

JustinSainton commented 8 years ago

I think you're right, that we need to have an option here. As I recall, WooCommerce does this. Thoughts on your ability to get this into 4.0? And if that's not possible - do you think that defaulting to the third list item is the way to go for now, and introduce an option down the road?

jbeales commented 8 years ago

I'm going to see what I can do tonight. It looks like there's enough remaining before 4.0 goes out that I'll get it in on time.

jbeales commented 8 years ago

Could @JustinSainton or @benhuson fill me in on what's going on with the WPSC_Coupon class vs. the wpsc_coupons class? There seems to be some duplication going on.

Edit: Nevermind. A closer look at wpsc_coupons shows me that it uses WPSC_Coupon for data about the actual coupon.

jbeales commented 8 years ago

To-Do list:

[x] Write unit tests for WPSC_Coupon
[x] Add UI to the admin.
[x] Test to make sure #170 doesn't pop up again
[x] What happens if a coupon only applies to a non-taxable item?
[x] Test a fresh install to make sure DB gets created properly.
[ ] Test this works properly for tax-included prices, (like VAT).
[ ] Test like crazy

benhuson commented 8 years ago

The WPSC_Coupon class is for interacting with a single coupon, methods for getting parameters, validation, saving etc.

The wpsc_coupons class should be for interacting with multiple coupons. E.g. Searching for valid coupons etc

There may be some overlap at the moment, but can be iterate on.

jbeales commented 8 years ago

Can someone check my calculations for tax-inclusive jurisdictions? This is what I expect would happen:

A $100 tax-inclusive product, with a 20% tax rate is $83.33 + $16.67 tax. A coupon for $25 off, that is applied before taxes are calculated, would mean the customer would pay $75 - or $62.5 + $12.50 tax, is that correct? (I think it is).

The trickier situation is for coupons that are applied after tax is calculated. In this case, with a $100 and 20% tax, purchase the tax is calculated as $16.67, like above. Then the total price is reduced to $75 by the discount, so we end up with $58.33 + $16.67 = $75, for an effective tax rate of 28.57%, (this number will change based on the size of the coupon). Is there ever a situation where that would happen? Coupons that are applied after the tax is calculated don't seem to make much sense for tax-inclusive pricing.

jbeales commented 8 years ago

I have another question, and I'd like as many answers, from as many different tax jurisdictions, as possible:

If a cart looks like this:

$20 item (non-taxable)
$10 item (taxable)
-----------------------------
$30 subtotal
(-$25 coupon)
$5 after-coupon subtotal

Should tax be charged on that remaining $5? My guess would be that yes, it should be taxed, I've got a call in to a Canadian accountant to confirm that's the case in Canada. How about other jurisdictions?

As an aside: In WPeC coupons are applied to the cart as a whole - not to individual items, (although the presence of certain individual items may be needed to use a coupon).

brendancarr commented 8 years ago

My client just brought this to my attention too - and lucky me, I was able to find this thread.

In this scenario it is doing this:

$99 + 5% tax is $103.95 $99 - 10% discount is $89.10, then it adds the original $4.95 tax = $94.05.

In Canada we would typically charge tax after calculating that subtotal - and in WooCommerce there is an option called apply before tax. I would hesitate a guess that it would cover both likely scenarios:

Non-Reimbursable coupons that do not include tax (cart or product discount before tax)
Reimbursable coupons (that are deducted after tax is applied)

I find in a lot of cases with clients up here it is only the first scenario: a dollar or percentage discount applied to the cart either through multiples or coupon codes, which has a final amount that tax is then applied to. Most will not have tax inclusive, as we are just used to having a product amount and paying the tax on top of it - unlike the UK where the VAT would be just included in the final price. We also tip in restaurants though, so there is that...

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Applying Discount and Tax error in total sale #1541