Potential tax calculation issues and recommended settings

Magento and Xero calculate tax amounts in different ways. In certain circumstances, this can cause Xero to reject exported transactions which don't comply with its own tax calculations.

The best way to minimise this is to set up Magento and Xero to calculate tax amounts in the most similar way possible. We recommend using the following Magento tax settings under System > Configuration > Tax > Calculation Settings, as these settings most closely match Xero's own tax settings:

• Tax Calculation Method Based On: Select “Row Total”
• Catalog Prices: Select “Excluding Tax”
• Shipping Prices: Select “Excluding Tax”
• Apply Customer Tax: Select “After Discount”
• Apply Discount On Prices: Select “Excluding Tax”

Please check with your accountant to confirm that these settings meet your business requirements.

Even using the settings above, it can still occur that Magento and Xero tax amounts do not match exactly. Fooman Connect: Xero provides a workaround by rounding the Magento tax amount in Xero to match the amount Xero expects to receive. Any adjustments that need to be made will appear in Xero's rounding account.