Tax calculations are one of the most error-prone parts of manual invoicing. Wrong rates, forgotten tax, tax applied to exempt items, or miscalculated totals can create problems with customers, suppliers, and tax authorities. When iMagic Inventory handles tax automatically — with the right rates configured for your business — these errors simply don’t happen.

iMagic Inventory supports both single tax rates (such as GST or VAT applied uniformly) and dual tax rates (common in jurisdictions where different tax categories apply, or where state and federal taxes both apply). You can even configure the two rates to compound — Tax 2 calculated on the total including Tax 1.

Understanding Single Tax Rates

For most businesses, a single tax rate covers everything. You collect GST, VAT, or sales tax at one percentage rate on all applicable sales. In iMagic Inventory, you configure this rate once in the settings, and iMagic Inventory applies it automatically to every invoice line. You can mark individual inventory items as tax-exempt if some of your products don’t attract tax.

Understanding Dual Tax Rates

Some businesses operate in environments where two tax rates apply simultaneously. Examples include businesses in jurisdictions with both state and federal sales taxes, or businesses in industries with separate levy rates (such as an environmental levy on top of standard GST). iMagic Inventory’s dual tax rate feature lets you configure both rates — Tax 1 and Tax 2 — and specify whether they’re applied independently or whether Tax 2 compounds on top of Tax 1.

Compounding tax means iMagic Inventory calculates Tax 2 on the subtotal plus Tax 1, rather than on the original price. This mirrors how some tax jurisdictions actually work and ensures your invoice totals are precisely accurate.

Configuring Tax Rates

Tax configuration in iMagic Inventory is done through the Configure menu. Navigate to the tax settings section and you’ll find fields for the tax name (how it appears on invoices — “GST”, “VAT”, “Sales Tax”), the rate as a percentage, and, if you’re using dual tax, the second rate and whether it compounds.

Set these once and iMagic Inventory will apply the correct rates automatically to every invoice from that point forward.

Applying Tax to Individual Items

Not all products in your inventory may be taxable. Fresh food, medicine, and certain other categories may be tax-exempt in your jurisdiction. iMagic Inventory lets you set the tax status on each inventory item individually. Items marked as exempt won’t have tax applied when they appear on an invoice — even though your default tax rate is set.

In iMagic Inventory, open View > Inventory, select an item, and review the tax settings. You can configure whether Tax 1, Tax 2, both, or neither applies to that specific product.

How to Configure Tax Rates in iMagic Inventory

  1. In iMagic Inventory, go to the Configure menu and look for the tax settings or invoice settings section.
  2. Enter your primary tax name (e.g., “GST” or “VAT”) and the applicable rate as a percentage.
  3. If your business requires dual tax, enable Tax 2 and enter the name and rate for the second tax.
  4. If Tax 2 should compound on Tax 1, enable the compounding option.
  5. Save your settings.
  6. Go to View > Inventory and review individual items that may be tax-exempt. For each exempt item, uncheck the applicable tax(es) in the item’s tax settings.
  7. Create a test invoice using New Invoice and add a mix of taxable and non-taxable items to confirm iMagic Inventory calculates the tax correctly.
  8. Review the tax totals at the bottom of the invoice screen to confirm they match your expected amounts.

Staying Compliant as Tax Rates Change

Tax rates change from time to time — budget announcements can change GST or VAT rates with relatively short notice. When this happens, update your tax configuration immediately via the Configure menu in iMagic Inventory. From that moment, all new invoices will use the updated rate. iMagic Inventory retains the rate that was current when historical invoices were created, which is correct for record-keeping purposes.

Getting tax right isn’t just about compliance — it’s about trust. Customers who receive accurate invoices with clearly labelled tax amounts have confidence in your professionalism.

Download iMagic Inventory free for 30 days and configure your tax settings correctly from the start.