I'm using Magento and I need a solution to implement custom tax rate

Question

I have the following tax setting now

• Subtotal: $10.00
• Shipping & Handling: $5.00
• Tax (at the moment just using 10% of Subtotal) (10%):$1.00
• Grand Total: $16.00

And I want it like :

• Subtotal: $10.00

• Shipping & Handling: $5.00

• Tax (need it to be 10% of subtotal [which is working] AND 10% of 54% of shipping & Handling) (10%): $1.27 [$1 as 10% of subtotal and $0.27 for $2.70(which is 54% of $5.00 shipping cost) ]

• Grand Total: $16.27

Thank you,

Answer 1

Well, 5% is the same as 10% of 50% so just set a tax rate of 5% for shipping.

You can set the tax class for shipping under System -> Configuration -> Tax -> Tax Class -> Tax Class for Shipping