Issue with GST refund instead of HST on local pickup order

Accounting & Taxes

Topic summary

A Shopify store in Ontario, Canada is experiencing a tax calculation error during order exchanges for local pickup.

The Problem:

  • Customer with Quebec address placed local pickup order
  • HST (13%) was correctly charged at checkout
  • When item was exchanged in-store and order updated in Shopify, the system calculated refund using GST (5%) instead of HST (13%)
  • This created an incorrect refund amount of $4.80

Key Questions:

  • Why does Shopify default to GST for refunds when HST was originally charged?
  • Is the issue caused by the customer’s Quebec address overriding the pickup location?
  • How to configure Shopify to consistently apply HST (13%) for all local pickup orders regardless of customer address?

Status: Unresolved - seeking guidance on tax configuration for pickup orders.

Summarized with AI on November 2. AI used: claude-sonnet-4-5-20250929.
1

Hi, I’m hoping to get some clarity on an issue we’ve encountered with our shopify tax setup.

Our store operates in Ontario, Canada, and we charge HST (13%) based on our operating location, even for customers with addresses in other provinces, since all orders are picked up in-store.

Here’s what happened:

  • A customer with a Quebec address placed an order online and selected local pickup. HST (13%) was correctly charged, which is exactly how we want it to work.
  • The customer came to the store and swapped the item for a different size. We processed the exchange and updated the order in Shopify to adjust inventory.
  • Shopify automatically calculated a refund for 5% GST ($4.80) instead of recognizing that HST (13%) had been charged on the original transaction. This created a situation where it appears we “owe” the customer a refund, even though the taxes were correctly charged initially.

My questions:

  • Why is shopify using GST instead of HST for the refund calculation? is this tied to the customer’s Quebec address even though the order was for local pickup?
  • How can i prevent this from happening in the future? We want Shopify to always use HST for all in-store pickup orders, regardless of the customer’s address.

Thanks in advance!