The taxes!!

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Can someone clarify setting up the taxes please? My store is located in Canada and want to make sure I am understanding the procedure properly:

  1. I do not need to register to collect tax unless I make $30,000 or more in the past twelve months
  2. Once I have made more than $30,000 I need to register with the relevant tax agencies in Canada to start charging tax
  3. BUT, if my earnings remain less than the threshold of  $30,000 then I don't need to charge tax on my products or remit any taxes either

Now, what about purchases from other countries? Do I need to set up charging each relevant tax from each individual country worldwide?

Finding this very confusing....and the more I think about it and read different things it seems to become more confusing!!

 

Appreciate any help!

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Shopify Staff
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This is an accepted solution.

Hi, @JRM75!

 

Julie here from Shopify Support.

 

It's great to hear that you're considering how to set up taxes on your store. This is something that can often be overlooked so I'm glad you're doing your due diligence. I will preface this response by saying that I am in no means a tax expert and it's recommended that you seek advice from a local tax professional. That being said, I'd be happy to provide you with some information that should help clear things up. 

 

You're right - generally, in Canada you need to register for a GST/HST account if you sell products or services that are taxable and your worldwide revenue is more than $30,000 CAD over the past 12 months. If your sales are lower than the threshold, then you don't need to register for a GST/HST account, and you don't need to collect or remit taxes. You can find more information on this here

 

If you decide to charge sales tax, then you can take advantage of Shopify's automatic tax calculations to automatically charge customers the appropriate tax rates that apply in Canada. You can learn more about setting up Canadian taxes here

 

When it comes to international orders, however, usually you would only charge tax in the countries you are doing business in. For example, if I have a physical presence in Canada and a Canadian shopper makes a purchase, they will be subject to Canadian taxes. If I have that same Canadian location but a customer orders from the United States, there will be no taxes charged on the purchase. It will instead be up to the country of destination to charge import taxes and duties. We actually have a help doc on duties I suggest checking out. It goes over how duties are typically calculated and charged and I think you'll find it pretty useful. 

 

Ultimately, if you are unclear on how you should be charging customers tax, I would suggest getting in touch with a tax expert for further clarity. As every country has different tax laws, seeking professional advice would be a good idea.

 

I hope this helps clear things up! Let me know if you have any further questions. 

Julie | Social Care @ Shopify
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