We have come across an issue with the way tax exemptions are calculated for international purchases on Australian sites.
If an international purchase is made and goods will be shipped outside of Australia, they are exempt from paying 10% GST.
This means that the order total should be reduced by 10% from the purchase price.
Unfortunately, your support team have tried to explain that Shopify only has one price and if tax inclusive pricing is turned on the merchant absorbs the 10% GST and the sell price remains the same.
THIS IS INCORRECT AND INTERNATIONAL PURCHASES END UP BEING CHARGED THE FULL AMOUNT AND A REFUND OF THE GST IS REQUIRED TO ACCOUNT FOR THIS OVERAGE. THIS AFFECTS ALL AUSTRALIAN CUSTOMERS WHO SELL INTERNATIONALLY.
By law in Australia, goods must be advertised as tax inclusive prices. So it is not possible to turn off tax inclusive pricing and set a 0% tax rate for international purchases.
There are also tax implications when integrating with Xero or POS systems as there is no way for a business to track the GST collected from GST exempt.
I have raised this issue with a few support agents and the response I have been given is 'this is not the way Shopify works'.
I am starting this thread to make other Australians aware of this issue so Shopify will properly address the issue. It's obvious that their simple tax inclusive pricing solution was implemented without considering the implications of tax reporting.
We have been using Shopify for over a month or so. We are pleased with the experience so far except for your front line chat support. We have the problem of the GST being charged to customers that are from overseas. This is not correct in any way. GST is exempt for for all overseas transactions and your chat support insist that this is not correct. In fact I was quoted the following "What you require does not fall within the capabilities of our platform currently."
Ouch! I pay big bucks for this platform and was told it was the best out there. When I asked your support person to escalate this problem to a higher person. I was told "There's nothing to escalate I'm afraid."
and "It's not possible to charge certain customers less."
So I pay for a system that is suppose to work in my country. Shopify gladly take my money every month. And when I ask for help and ask to escalate they say there's nothing to escalate.
Poor choice of words if you ask me.
If your senior tech support require a transcript of the chat I had with your staff I will be glad to provide.
I'm sure you have a copy if you look hard enough. This issue needs to be fixed asap as I cannot sell to overseas customers.
I await your response.
If you choose to include the tax in the product price, you really mean it. So whatever sale you make (locally or otherwise) will always contain that tax. If you need to ship to regions that are exempt, you've got two options:
If you choose the latter, you'd just need to make some minor mods to the theme files using the power of math so you show the pricing inc GST. Basic stuff.
Of course, it would be nicer if the system was smart enough to remove the tax should you opt to have it included, but that's not how it works (at the moment).
I understand there is a work around to display the correct price, however this is only a quick fix and doesn't address the issue when you are integrating to other systems like Accounting or POS.
I'd really like to see Shopify address the problem correctly as this affects all Australian customers and we should not have to resort to a work around to cover up what is essentially a tax calculation which has not been properly thought out and executed.
@Jack - if this is important to you and you need a response from Shopify just head to the support page and ask directly. This is a community forum and not an official help channel (even though plenty of staff do frequent the forums) so some threads may never been seen by staff.