Shopify disabled "Charge sales tax on shipping" automatically

Accounting & Taxes
4

i am currently exchanging with Shopify Plus Support on this matter; here is a copy of my last reply:

Thank you for your follow-up and for providing additional insights into the matter. I appreciate your proactive support in addressing this issue.

However, I want to clarify that the problem is not specific to any individual order or product setup but rather with the functionality introduced in Shopify’s Dec 20th, 2024 release, as described in the Shopify Changelog.

Key Issue:
The proportional tax calculation being applied to shipping fees is incorrect during the federal tax holiday. No part of the CRA’s documentation or the Canadian government’s GST/HST tax break guidelines specifies that shipping fees should be taxed proportionally based on the mix of zero-rated and taxable items in an order.

In fact, shipping fees are explicitly not part of the tax break:
CRA Q&A - Shipping Fees Not Included.

Concerns:

  • Shopify’s proportional tax calculation on shipping fees introduced in the Dec 20th release is causing undercharging of sales tax on shipping fees, which could lead to compliance issues for Canadian merchants.
  • This implementation contradicts the CRA’s rules and the intent of the federal tax holiday.

Request for Action:

  1. Please review the Dec 20th, 2024 release and confirm why shipping fees are being subjected to proportional tax calculations.
  2. Provide clarification on whether Shopify intends to align with the CRA’s explicit guidelines, which do not require proportional tax adjustments for shipping fees.
  3. If this is a system-wide issue, Shopify should prioritize reverting or adjusting this change to ensure compliance with CRA regulations and merchant needs.

I should not have to provide specific examples or screenshots for this matter, as the issue lies with the system-wide implementation of the proportional tax feature. I trust Shopify will recognize the importance of resolving this promptly to prevent further compliance risks for Canadian merchants.

Thank you for your attention to this matter. I look forward to hearing how this can be resolved.

Best regards,