Why is tax calculation incorrect in Ontario on my ecommerce platform?

RMcLayKeyline
Visitor
1 0 0

As per below, the taxes are not being calculated correctly by shopify and is also not being added to the total amount due by customer.

Subtotal - $225.00
Taxes - HST 13% - 25.88 - (should actually be $225.00 x .13 = $29.25)
Total - $225.00 (should actually be $225.00 + $29.25 = $254.25)
A. Why is the taxes not calculating at 13%
B. Why is this not being added to the total!!!!!

RMcLayKeyline_0-1662132676424.png

 

Replies 2 (2)

Nick_Marketing
Shopify Partner
1487 336 465

Try going into Settings > Taxes and Duties > at the very bottom of the page uncheck "All prices include tax".

Then do a test order - taxes should be added on top of the subtotal and shipping.

2022-09-02 12_56_02.png

Nick | Ecommerce & Marketing Technology Consultant | Toronto, CANADA
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Victor
Shopify Staff
2513 230 534

Hi @RMcLayKeyline,

 

I believe @Nick_Marketing has the correct suggestion here. You can see in your screenshot that the tax line reads "HST 13% (Included)", which means that the price of $225 is treated as tax-inclusive and for that reason no additional tax is being added on to this amount at checkout. This means that Shopify is reading the $225 product price to be with tax included ($225 = $199.12 x 1.13), so $25.88 is the amount of tax included in the order.

 

As sales taxes are added on to product prices in Ontario at the time of purchase, you'll want to uncheck the "All prices include tax" option shown in @Nick_Marketing's screenshot. This will then tell Shopify's tax system that the $225 price is tax-exclusive and the 13% tax rate will then be applied at checkout ($225 x 1.13 = $254.25), with a tax amount of $29.25 added onto the order.

 

I hope this explains things but please let me know if you have any further questions.

Victor | Social Care @ Shopify 
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