Can someone please advise what, if any taxes I need to include for USA, Australia, NZ, and Europe. I was informed that I only charge GST (PST/HST when applicable) to Canadian buyers and nothing to International buyers is this correct?
Morgan here from the Social Media team at Shopify.
Welcome to the forums, thanks for stopping by. I completely understand how the idea of setting up taxes for an e-commerce site can seem daunting or confusing, especially when you compare it to real world in person scenarios. I want to preface this post by saying I'm not a tax professional, and can't give you official tax advice. However, I can provide everything you may need to know about taxes in terms of how that looks within Shopify.
When you think about taxes in the world of "online," you want to understand that taxes are collected locally most of the time. This is why, when you go to a physical store, you can usually count on there being tax on your products. However, when selling/shopping online, if you are from another region or country you may not be required to pay the shops local taxes.
When you set up your taxes within Shopify, your admin will consider this automatically. As a general rule you only need to charge taxes to customers that have an address within your region. (The address you used for your stores location).
As long as you have "charge tax on this product" checked off within your product pages, and you haven't adjusted any of the automated tax settings under Settings>Taxes your shops taxes will follow this general rule, and will only collect tax for appropriate customers. -No extra set up is required.
The only time an override or extra step is needed, is if you sell a product that has it's own specific tax rules. Ie. Medical products, Drugs and biologicals, which may be taxed across your country rather than regionally. In saying this, there is also the opposite to consider, products that are tax exempt. This is where you want to speak with a tax professional to see if your products may fall into a category that isn't within "general tax ruling"
Lastly, if you do need to override or adjust your taxes you can do so under Settings>Taxes. However if a product is tax exempt, you will simply uncheck "charge taxes on this product" within the product page, not under Settings>Taxes.
I hope this information clears up some of the confusion around taxation for an online store. Depending on the size of your business, it is also good to note you normally don't have to pay income taxes on business profits until your revenues are above a certain threshold. However, you will want to speak with an accountant to see where your business fits into that!
Aside from your tax concerns, how's your store coming along? Black Friday and Cyber Monday is fast approaching, so it's a great time to get all those loose ends tied up! This BFCM toolbox has been essential in my Black Friday preparations, it may be of help to you as well. Do you have anything else holding you back with your shop right now? I'd be happy to have a look for you.
If not, all the best with your store, and the fun world of taxes!
Morgan | Social Care @ Shopify
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I think you have the right answers to my confusing questions about taxes.
I am new to e-commerce, planning to start a dropshipping business I'm almost done with my website but not sure about on collecting tax. I'm located in Alberta Canada and my Target Markets are US, UK, Canada and Australia. I have a few questions here. Hope you can help me.
1. Do I need to collect taxes all the Countries where my customers are or just where I'm located?
2. Here in Canada we have different sales taxes. For example, here on where I'm located Alberta we have 5% sales tax. Do I need to register the other provinces too?
Thank you in advance Morgan!