If you are selling outside Canada, please refer to the article Tax settings.
If you are selling within Canada, your shop is automatically configured with those basic tax settings. The default settings are based on the address you input during the initial shop set-up.
In Canada, sales tax is collected federally and by the provinces and territories. The kinds of taxes customers have to pay depend on the province and territory from where they are making a purchase. This makes tax calculation more complex than in most other countries, which often have just one set of sales taxes nationwide.
How does the tax calculation work in my shop?
By default, the prices in your shop are displayed as net prices. When a customer goes through the checkout and enters his address, the correct taxes are calculated. In the last step of the order process (“Check & Order”) the tax rate is then displayed to the customer, as well as the final price the customer has to pay (including taxes).
What do I need to know about taxes within Canada?
Canada has 10 provinces and 3 territories with different tax rates. All those provinces and territories collect the so-called “Goods and Services tax” (GST) of 5%. Some provinces and territories additionally collect the Provincial sales tax (PST). If GST and PST are combined, this combination is called Harmonized sales tax (HST).
There are three kinds of provincial sales taxes:
If a customer lives in a province or a territory that only collects the GST, they only have to pay the 5% GST.
GST + PST
If a customer lives in a province or a territory that collects GST + PST, they have to pay both. Although the invoice only states the combined value of GST + PST, the taxes are calculated appropriately. Note: in Quebec the PST is called QST.
If a customer lives in a province or a territory that collects HST, they have to pay GST + PST as well, but only the total tax rate needs to be mentioned on the invoice.
How do I view and edit the tax settings?
During the setup of your shop, when you enter an address in Canada the correct tax matrix is automatically created. The tax matrix will also be updated if you change your shop’s location under Settings General.
To view and edit the tax settings in the administration area, select Settings in the main menu and then Taxes. On this page, you can see the tax matrix. It includes a row for each province and territory of Canada (including the kind of taxes they collect) and a row for the rest of the world (International). For most merchants the tax calculation that comes with the shop is entirely sufficient. However, you should always check if everything is correct.
Usually it is not necessary to edit the tax matrix yourself. However, if the tax situation of your shop requires special attention you can adapt it to your needs. Please note that this makes you responsible for keeping the tax matrix up to date manually.
To change the tax matrix select Edit, then confirm by selecting Edit. You can make the changes directly in the table and then save the changes. To restore the default values, select Reset to default settings.
You are responsible to take care of the correct tax rates of your shop. Even though we update the tax rates regularly, you should always make sure that the information is accurate.
For any questions concerning taxes, please read this page that is provided by the Canadian government, or consult a tax accountant.