Setting Canadian tax exemptions

Note

This guide is for merchants who sell in Canada. It's your responsibility to consult with local tax authorities or a tax professional to verify that you charge your customers the correct tax rates, and to ensure that you file and remit your taxes correctly.

You can set exemptions for your customers to prevent them from being charged specific taxes. For example, you can set exemptions for First Nations status holders or resellers based in particular provinces.

Types of exemptions

You can apply the following tax exemptions to your customers in Shopify. Exemptions are available for those provinces where you are registered for taxes. If you haven't yet registered, then refer to Setting up Canadian taxes.

Table listing Canadian tax exemptions

Exemption	Description
First Nations status exemption	Applies to First Nations peoples of Canada that hold a valid Certificate of Indian Status (HST, PST, RST, and QST). This exemption applies to the provincial portion of taxes for both individuals and organizations. Exemptions exist in all provinces, so you should check with your provincial tax agency for more details.
Diplomat exemption	Applies to Canadian diplomats in Manitoba (GST, RST) and Nova Scotia (HST). Exemptions differ from province to province, so you should check with your provincial tax agency for more details.
Reseller exemption	Applies to customers that purchase goods for resale or lease in British Columbia (PST), Manitoba (RST), and Saskatchewan (PST).
Commercial fishery exemption	Applies to customers that purchase goods for use in commercial fishing in British Columbia (PST), Manitoba (RST), Nova Scotia (HST), Prince Edward Island (HST), and Saskatchewan (PST).
Production machinery exemption	Applies to customers that purchase production machinery in British Columbia (PST) and Saskatchewan (PST).
Contractor exemption	Applies to contractors in British Columbia (PST) and Saskatchewan (PST).
Subcontractor exemption	Applies to subcontractors in British Columbia (PST) and Saskatchewan (PST).
Purchase exemption	Applies to vehicle purchases in Ontario (RST).
Farmer exemption	Applies to purchases of farming equipment in Manitoba (RST), Nova Scotia (HST), and Saskatchewan (PST).

Customers that are eligible for exemption from taxes will have a certificate or other form of documentation proving their status. When a customer contacts you to indicate that they have a tax exemption, you can ask them for a copy of this documentation. If you're not sure if your customer is eligible, then you should request documentation and check with the appropriate tax authority.

Shopify Plus

If Avalara is enabled as part of your plan, then your exemptions are managed by Avalara Avatax. To learn more about their exemption codes, refer to their documentation in the Avalara Help Center.

Set a tax exemption

To learn more about available tax exemptions, refer to Types of exemptions.

1. From your Shopify admin, go to Customers and select a customer.
2. Click Manage in the TAX SETTINGS section.
3. Select the tax exemption that you'd like to set for your customer.

It's important to note that verifying that your customers are eligible for these exemptions is your responsibility. It's not possible to verify this using the Shopify admin.

Tax exemptions on POS

Any tax exemptions you've set up are applied when using the Shopify POS app, though they're displayed differently depending on the device you use.

• On Android devices, the subtotal is updated to reflect the new tax amount as soon as you select a tax-exempt customer.
• On iOS devices, the subtotal remains the same until you tap the Charge button. After you tap the button, a prompt indicating the new price is displayed.

Related links

• Managing your Canadian taxes
• Registering with Canadian tax agencies
• Canadian tax override requirements
• Canadian tax reference