Manage your Canadian taxes
After you update your store to use the new Canadian tax features, you can manage your tax settings, including your registrations, overrides, and customer exemptions.
Manage the regions in which you're registered
You can add, delete, or change your registrations or account numbers at any time.
- From your Shopify admin, go to Settings > Taxes and duties.
- In the Countries/regions section, click*Canada*.
- In the Sales tax section, do either of the following:
- To set up a new tax registration, click Collect sales tax.
- To edit an existing tax registration, click the ... button next to the region you want to edit.
- Update your regions and account numbers.
- Click Save.
Canadian tax override requirements
You can override the taxes that Shopify sets, but be aware of the following restrictions:
- Overrides to Canada apply only to the GST in British Columbia, Manitoba, Saskatchewan, and Quebec.
- Overrides to New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and PEI tax rates apply only to their corresponding HST rates.
- Overrides to British Columbia, Manitoba, Saskatchewan, and Quebec tax rates apply only to their corresponding PST, RST, or QST rates.
- Alberta, Northwest Territories, Yukon, and Nunavut have no tax, so overrides can't be applied to those regions.
Overrides are also affected by your registrations:
- For overrides to apply to Canada GST, you need to add your Canadian GST account.
- For overrides to apply to HST rates in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, or PEI, you need to add your Canadian GST account.
- For overrides to apply to the Manitoba RST rate, you need to add your Manitoba account.
- For overrides to apply to the British Columbia PST rate, you need to add your British Columbia account.
- For overrides to apply to the Saskatchewan PST rate, you need to add your Saskatchewan account.
- For overrides to apply to the Quebec QST rate, you need to add your Quebec account.
Sometimes the default tax rates don't apply to certain products. For example, certain types of children's clothing might be exempt from tax or have a lower tax rate. If the default rates don't apply, then you need to create an override.
Creating an override is a two-step process. You first create a manual collection that includes the products that have a different tax rate. Then you specify in what region the override applies and its rate.
For details on collections, refer to Collections.
Create a collection:
- From your Shopify admin, go to Products > Collections.
- Click Create collection, and then enter a name for it.
- Under Collection type, select Manual
- Click Save collection.
Create the override:
- Go to Settings > Taxes and duties.
- In the Countries/regions section, click Canada.
- In the Tax overrides section, click Add product override.
- Select the collection.
- Select the region in which the override applies.
- Enter the tax rate for the collection in that region.
- Click Save.
Manage your tax exemptions
As well as setting up a customer to be exempt from all tax, you can exempt a customer from specific Canadian taxes. You can change a customer's exemption settings in your Shopify admin on the customer's profile. Refer to Setting Canadian tax exemptions for more information.
Manage your tax calculations
You can manage various settings that determine how tax is calculated on your products. For example, you can set whether taxes are included in your prices, whether to charge VAT on digital goods, and whether to apply tax to shipping costs. You manage these settings on the Taxes and duties settings page. Refer to Tax overrides and exemptions to learn more.
Go to Settings > Taxes and duties.
In the Tax calculations section, select the options that apply.
Previously, taxes were rounded at the invoice level by calculating the taxes on the order's subtotal, and then rounding the results. After you update your settings to use Canada tax features, tax amounts are rounded at the line-item level. In this case, the total tax value is calculated by applying the tax rate to each line in the order, rounding the result, and then adding these subtotals together to arrive at the total value of the order.
Rounding taxes at the line level improves the calculation of different tax rates and makes it easier to calculate taxes for orders that include taxable and non-taxable products.
Example of tax rounding at the invoice level and at the line-item level
A customer makes an order containing 42 different items, each of which have a price of $14.99 and are subject to 13% HST. The line item tax for each product is determined by multiplying the price (14.99) by the tax rate (0.13), for a result of 1.9487.
Previously, the tax of each line item was added together, and the total was rounded. In this case, the added total was $81.8454, which was rounded to $81.85.
Tax is now rounded at the line-item level, which means the tax amount is rounded for every product individually. The line-item tax amount of $1.9487 is rounded to $1.95, which is then added together to get the total. In this case, the tax total is $81.90.