Setting Canadian tax exemptions
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.
| 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.
Set a tax exemption
To learn more about available tax exemptions, refer to Types of exemptions.
From your Shopify admin, go to Customers.
Click a customer that you want to set tax exemptions for.
In the Customer section, click …, and then click Manage tax settings.
-
In the Tax settings section, select whether to collect tax:
- To collect tax, select Collect tax.
- To not collect tax, select Don't collect tax.
- To collect tax except for applicable exemptions, select Collect tax unless exemptions apply, and then in the Select exemptions drop-down menu select the tax exemptions.
Click Save.
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.