Issue: Australian stores report GST (10%) being miscalculated on shipping in Shopify, especially when carts mix GST‑free and taxable items. Some saw GST not applied to freight or applied inconsistently, causing underbilling and accounting reconciliation issues (e.g., MYOB/Xero).
Details and behavior: One example shows Shopify calculating GST as $9.41 on a cart with a GST‑free item, a taxable item, and shipping, suggesting Shopify apportions GST on shipping based on the proportion of taxable items in the cart.
Workarounds and attempts:
Mark all products “Charge tax on this product” (bulk edit/CSV). Helped one merchant but not others using GST‑inclusive display where shipping then failed to add GST at checkout.
Make all prices and freight GST‑inclusive and disable Shopify tax; issue compliant tax invoices via MYOB.
Custom app (Shopify Plus) to compute tax and add a custom line item.
ATO interpretation: A later post cites ATO guidance that GST on shipping should be apportioned to the taxable proportion of the shipment (not always fully taxable), aligning with Shopify’s apparent approach. This contradicts earlier assumptions.
Status: No official Shopify fix or final confirmation. Discussion remains open; key question on correct ATO treatment vs Shopify’s calculation persists. Images were shared for bulk‑edit steps but are not essential.
Summarized with AI on December 21.
AI used: gpt-5.
In Australia GST is charged on freight irrespective of whether the goods sold are GST free . The only exception of this method is where there is only one freight method offered. We have noticed a flaw in Shopify recently (Feb 2021) where it stopped charging GST on freight if there is a GST free item sold.
Could someone please advice if you have an similar issue or how did you go about solving it or the ATO ruling on it that sets Shopify behaviour.
We have raised it with Shopify tech support over 2 weeks back and the stock answer is that the team is very busy to respond .
Could anyone assist in how Shopify works out GST payable based on this order in our cart . The GST rate is 10% and all the figures shown are x-GST
Item A (GST Free) Value $5.75
Item B(GST Applies) Value $81.90
Total Order Value = $87.65
Freight (GST applies) = $15.30
GST (Shopify calculation) = $9.41
Total Order Value (incl of GST and Freight) = $112.36
Shopify seems to be apportioning the GST on freight based on the proportion of the value of the items for which GST applies …however I just cannot get how they arrive at this number
Yes I have noticed that there is either no GST be charged on freight or the wrong rate of gst is charged, yet some are charged the correct rate of 10%.
Hi - I have a incident opened with Shopify for over 2 months now and chatting with their support team, it has reached the tax specialists Q … so probably in a couple of months , a response will hopefully be obtained. The difficulty is that in some cases the GST paid value is erroneous and Shopify under bills the transaction which then cannot be reconciled with the accounting package we use. Its a problem ..
We have the same issue with our orders. We tried setting up a Tax Overrides (only for Australia) for the shipping fee and also for all of our product collections.
It used to be fine and now I’m getting miscalculations. We’re going around in circles….and orders are coming under-charging for GST.
How did you go about solving it?
I can’t seem to get it answered by the Shopify help desk.
There was absolutely no response from Shopify which is a learning for us
going forward. We use MYOB at the backend and their solution was a manual
work around . Essentially speaking, interpreting the ATO stance on GST on
freight on a single invoice that carries GST and non GST items,has not been
implemented transparently in both Shopify and MYOB.
To solve the issue - we changed all our prices and freight to GST inclusive
and setup Shopify to not calculate tax/GST. We send tax invoices via MYOB
that show the GST amount.
I hope a person who finds this forum help sold their problem with wrong GST.
After our 3rd time contacting the support, we find the solution to this problem and it is just putting a checkmark “Charge tax on this product” on each product.
I just paste below the email from the support:
I hope this message finds you well. I just wanted to do a follow up email regarding your concern with the miscalculation with the GST.
I raised the concern to our Tax Supports and was told that the reason it’s not properly collecting the taxes is because the “Charge tax on this product” for the products are not checked. Since you are not collecting any taxes on other countries, we would like to suggest to check this on the product and it will not charge any tax for the countries that you are not collecting taxes at.
If the item is not checked to charge tax then the item will not be charged tax. Only shipping will.
To do the bulk change to all the product you can refer to this article message from the Support:
There are two ways, we can do this (bulk edit).
The first, is by checking the box for select products. After that click Edit Products and you should see Add Fields.
The other option is, by using product CSV file. You can export your product’s CSV file then edit and marked it as TRUE under the Variant Taxable column then import it to the store. To learn more, please see help guide below for Using CSV file.
Just out of topic, I would like to let you know that there was a recent update with the Facebook Sales Channel and for some reason it have disconnected almost all of the Facebook account of our merchants. To continue selling on Facebook please do update the channel by clicking the Update Sales Channel and reconnect your account to make sure your products are always sync.
We already have “Charge tax on this product” on each product checked.
The site works correctly if GST is shown at check out but the website cannot show GST inclusive prices as the shipping does not then add the GST at the end.
Have you had any more success on this? I really would like to make our site GST inclusive but can’t for this issue. I state across the site that GST is calculated at check out. Not ideal because Australian sites should be inclusive. However, saying that we are still getting sales. I am sure we might lose a few though too.
I am having the same issue. GST should be charged on the shipping amount regardless if there are items that are non taxable or taxable or a mix of both.
We pay GST on our Australia Post bill, so we need to charge it to the customer.
I understand this post is old. I just wanted to give an idea if it works for you guys. And if any one of you are on Shopify Plus, that will be great.
We had similar problem for USA based client. They had different rates of tax based on product type and also from where customer belongs to as well. Hence we made all products tax free and developed custom app that will add custom line item equal amount of tax. So app do calculation based on business needs. App also gives report of tax collected, so it can help in filling Tax.
We recently looked into this and were surprised that the ATO state that GST is only charged on the proportion of items in a shipment that attract GST. Since you are a business that only provides shipping as a means for you customer to enjoy your product, you don’t charge the customer GST on that shipping. You only charge GST on the proportion of the shipping that had a GST-attracting product. For example, if half of the cart attracted GST, then 50% of the shipping would also attract GST. If 100% of the cart attracted GST, then 100% of the shipping would also attract GST. If 0% of the cart attracted GST, then 0% of the shipping would also attract GST. It’s all to do with what is your primary business. Seems counter-intuitive, but that’s the way the ATO does it.
At the end of the FY, you are claiming the full GST on the shipping that you have paid for, and your customers are claiming the GST only on the proportion of the GST that they paid for GST-attracting products in their shipments. It works out, it’s just an overly-complicated way to go about things.
