Store in Ontario Canada. We charge HST 13% on everything but Books (GST only 5%).
I added our tax account number
I created a manual collection (GST Only) and added a few of our books to it.(They are also in out "Books and Magazines" Collection(Auto))
I then created a Tax exemption for Canada for for the manual collection, put 5% and saved it - all by the book per the instructions
I then "purchased" one of the books in that collection - at check out it applied the full 13% tax not the 5% tax.
Is this functionality broken? Did I do something wrong or is this function not available to the basic Shopify level?
I am wanting to do the same - followed the instructions here to the same result as you. GST and PST are still being applied. The Tax Override is not being used.
Appears that Tax Overrides are not working.
I solved this problem by adjusting the Tax Override Rate.
In my case I wanted some products to be PST exempt. Instead of setting the tax rate to 5%, I set it to 0% and it's now only applying GST.
I don't understand the logic, but try using 0%.
I hope this will help someone:
When I set up my store in Dec. 2020, I created tax overrides for my automated Book collection. HST provinces at 5%, PST/RST provinces at 0%. It worked well, until this month (Jan. 2021), when it was completely wiped out. No warning. Customers were now being charged the full tax.
I have tried recreating the tax override for the Book collection, but the system will not allow me to do a tax override of any automated collection now.
So I created a manual collection I called Books-Manual Tax Override. Went to products and filtered to all my Book collection. Selected them en masse and added them now to my Book-Manual Tax Override collection as well.
Then created Tax overrides for each province that has HST or PST or RST:
British Columbia: 0
New Brunswick: 5
Newfoundland and Labrador: 5
Nova Scotia: 5
Prince Edward Island: 5
I tried it out, and it seems to be fine. Just have to remember that each time I add a product, I add it to the Books-Manual Tax Override collection as well.
We will soon be selling other items that are also PST exempt. How fun it will be setting these all up!
I'm crossing my fingers that my tax overrides will now stay put and are not just wiped out by the system.
NoName30, your suggestion worked - thank you!! Seems so silly that we have to do a workaround to get an override to work. Hope that gets fixed!
This is the correct answer although unintuitive.
You are not overriding the total tax rate for a product to its final rate, but rather overriding the individual region's tax rate.
So to remove PST, you select the province for which you don't want it to apply and then set that rate to 0%. This leaves GST to be charged.
I don't know how you calculated the 5's and 0's, but they do practically work when I do the provincial math at checkout. Could you elaborate how you made this calculation to aid us in case provincial rates change in the future? Thanks for your help.
Well, provinces that are not under the HST system, but rather administer their own provincial taxation collection will be 0. Provinces that collect HST, will be the going GST rate (currently 5%). So only needs adjusting if a province changes to become HST, or if the GST rate changes. Shopify should adjust the provinicial taxes automatically I would think. In order to be charging them, you need to have your sales tax ID numbers put in under Settings, Taxes, Canada - Manage, Sales Tax Collection - Collect Sales Tax.
Thanks for the quick reply my friend. Pardon my brain-fog but why does putting BC to "0" result in "-7%" and putting Ontario to "+5" result in -8%? I get that it practically works because Shopify adjusts the numbers on the back-end, but I just can't seem to square-up their equation for myself.
BC, Sask., Manitoba, and Quebec all administer their own provincial taxes. Other provinces have opted into the HST system - harmonized sales tax. The HST is comprised of both the provincial tax and the gst tax. A company that collects HST remits it with any GST-only taxes to the federal government under the GST account. The feds in turn send the province some money. If your company collects taxes in BC, Sask., Manitoba, and Quebec, then separate provincial accounts are set up with each province. Here is a link with a fairly easy to understand explanation: https://www.investopedia.com/terms/h/harmonized-sales-tax.asp
Shopify operates on the basis of seeing HST as a lump tax for that province, so for a tax override on PST exempt items, you need to put in that the amount is changed to 5% so as to charge the gst tax portion. So for Ontario, which has HST of 13%, you have to put in 5% for your tax override. But for BC, Shopify actually splits out the taxes - 7% for PST and 5% for GST. As you are overriding the PST portion of Shopify's brain, you just put in "0".
It is rather counterintuitive I think, but it works.
Oh and here is another conundrum: If you are shipping provincial sales tax exempt items, the charge for shipping should also be exempt from provincial sales tax. Except, Shopify is not set up to handle this. Currently there is no way to exclude provincial sales tax on the shipping cost for exempt items. I contacted Shopify about this approx. 3 months ago and they confirmed it is something they need to develop.
I just noticed your reply. You explained it very well and I finally comprehend it all without even needing to view your thoughtful link. When I used your calculations the other day, I did indeed notice that the full Ontario HST was charged on the shipping portion. For being an e-commerce giant, Shopify seems to move very slow at even the simplest implementations.
A large pizza chain here in Ontario charges the full GST for their discounted walk-in specials when ordered online. Over a 50 cent difference. I have been counting my pizzas, and I will call in "my chips" when they have overcharged me on enough tax to claim a free pizza. They probably still won't change their system. Even as an 80s baby I have seen in my lifetime how the entire workforce in general has turned into intellectual animals educated beyond their intelligence who show no interest to go beyond regular duties to do what is right. As soon as a customer service rep says "our policy", then you know you have found one of these robotic-cogs. This is a plague of the 21st century, and it's only getting worse brother!
Thanks for sharing your considerable amount of knowledge on the topic for us Canadians.
Good luck getting that pizza. It is amazing how few people in business really test their websites... is it a Shopify website? And makes you wonder if they actually claim the full GST to the feds. Aren't I distrustful.
I haven't found an ability on Shopify to make a report that actually breaks down my orders by province and the taxes paid for each province so I can use it to remit. Right now, we have to turn around and create a spreadsheet of the orders per payout, breaking out the taxes, that I can then input into my accounting software. Nobody at Shopify seemed to think through how the taxes charged have to be captured by the business and then reported to the various tax authorities. Rolling my eyes over here. For such a huge company, they still haven't ticked off all the boxes. They probably "have an app for that". LOL
I think they will be good for it. One time they lost my order, and I called back 3 hours later and they sent free pizzas. I am assuming most of the large pizza chains went online long before Shopify came around, but I am not that tech-savvy to make any authoritative claims here.
I am a first time entrepreneur, but my political insight leads me to believe there are enough tax loop holes these days to capitalize on without having to outright skim off the top, but that doesn't mean it's not happening. I am actually inclined to believe the new-age hype around distasteful abstract art is probably all just money laundering schemes justified by intellectualized fantasies disseminated by academia trendies. Corruption these days seems to acceptable as long as you "claim responsibility" and pay the fines. Did you "see" that sculpture of "air" that sold for like 15K recently? The only art-form is the storytelling- and that is generous of me to say.
As I am just breaking-in to Shopify, the whole "App for that" works for now, as the app fees make start-up costs inexpensive compared to an expensive comprehensive service, but this showcases another distasteful 21st century issue of licensing content ad infinitum. Everything digital is moving towards licensing, instead of actual ownership. Even worse is the licensing is perpetual. Adobe Photoshop moving to subscription-only usage will only increase piracy -but it's not about piracy- it is about milking the people who play by the rules as usual. No more hard days pay for a hard days work- people want lifetime entitlement for something they already capitalized on in the past. I see this as being a natural result of consumer hardware and software having reached a certain relative penultimate, and the only thing "new" is more pixels and the downsizing of the technology into "smart" phones or vehicles. Therefore, new versions of greatly designed software in the past, useful classics so to speak, would not be able to offer any useful novelties in the future besides from "security patches", which is basically all that Microsoft Windows now offers, besides from a visual face-lift and app integration which nobody really needs. Hackers are useful idiots now. But I digress.
Eventually I will hire a web developer and integrate as many "apps" that I use as possible, and it would be ideal to move what can be transferred in-house. I bet that Shopify Plus doesn't have this tax problem. But starting at $2,000 USD/month they better "have a free developer for that" instead of "a paid app for that". I hate to be cynical, and of course Shopify is overall still a great platform to start with at least, but it is mind-boggling that these little things which could be easily fixed are left to become a big deal. Maybe some Karen needs to complain a bit louder for something to get done. The squeaky wheel gets the grease right?
No, I hadn't heard about the air art "sculpture". Went and looked it up and, boy, some people know how to sell it. Ridiculous. I guess I missed my calling.
I'm with you on the licensing issue. I fear that we will be heading towards a society where a segment of the population will be technology "poor". Many already struggle with the basics of food and shelter. So how can they also pay for monthly licensing charges to keep their computers and phones functioning? Even in my business, I have seen a huge cost increase for licensing where at one time, I paid once only for a program. With my move to Shopify for my website, I went from paying only about $50USD/month for web hosting with a cart and a newsletter system, to now paying approx. $266USD for my newsletter account and Shopify fees and apps. Add in the various graphic design, payroll, microsoft office, security, & accounting license fees for probably another $100USD.
I am on the regular Shopify account program. Perhaps if I moved to the Advanced Shopify plan, I might get the reporting functions I need, but there is no guarantee on that. Yeah, the Shopify Plus plan might look after it, but who knows. For my current online volume, it costs me less to pay a staff member to do this for me just exactly how we need it done. As you say, it is mind boggling that some of the simple things are missed on their platform. But I think they are focusing on bigger, more profitable company adventures, rather than massaging the platform for best functioning and usage. They are quite comfortable for the consumer to buy an app, try it out, and hope that it doesn't have any bugs.
I have a question you may have experience with! (And unfortunately Shopify support has not been great)
I've just successfully created a manual collection for some of my PST-exempt products and seem to have successfully created provincial overrides so PST is not being charged. Your answer above was the easiest to implement - Shopify's own guides on how to create overrides were not helpful.
My issue: Shopify is still calculating and charging PST on shipping of these products, when only GST should be charged. Any experience with how to correct this? I don't want to create a manual shipping override as I do want the taxes on shipping to correspond with the products, rather than a blanket regional tax rate on shipping...
(In BC anyway, PST is charged on shipping if the products being shipped also have PST applied; products that only require GST have only GST applied to the shipping.)
Thanks in advance for any insights you may have.
Glad you were able to work out the tax override with a manual collection.
Regarding Tax Overrides on Shipping: You are correct - Shopify is charging the provincial sales tax on shipping provincial tax exempt items. So if you are shipping a tax exempt item such as a book to BC, then it will charge 5% on the item itself, but 12% on the shipping. If you are shipping to Ontario, then it will charge 5% on the item, but 13% on the shipping. I contacted Shopify about this in mid-May 2021, and they confirmed it is a limitation on the platform. There is no workaround to solve it, but they were going to send the issue to the developers. This explains why independent book resellers have have a online commerce platform that was developed just for them. If you scout around some of their websites, you can see that many are using the same platform and they work correctly.
They only way you could not overcharge the tax for shipping charges on these provincial tax exempt items to your customers, is to refund the difference. Which is even further complicated when the order consists of tax exempt items and non-exempt items. Pain in the neck to be sure.
Shopify seems to have been initially constructed for sellers to a limited location with only a few items that fall neatly into categories of taxation and shipping (ie, they fit in a certain size box and have a certain weight). Once you have a large number of items on your website with vast differences in tax status and size and weight, you have challenges. Seems like they didn't have a taxation specialist on board when building it out. But to give them credit, I've seen some improvements over the last year that has made life easier.
Yes, it is disheartening. But I don`t know that there are really many options at the same price range. When I had to make the switch to Shopify, my website developer said my only real other option was Magento. And that they would need more time and it would be at least 3x more expensive.
For sure, one hates to overcharge the customers on shipping, but that is the route I went. If anyone complains, we`ll address it then. So far, I`ve not heard from anyone. I just remit the extra taxes to the appropriate authorities.
To include the PST in the price of the items would be a huge workaround. We also have a Brick and Mortar and must have the prices match instore to online as so many of our customers check us out online before coming in to shop. We could never raise our prices to include any tax(es). To do so, the price will be higher, and despite telling customers the prices are inclusive of tax(es), they don`t do the math. People really look only see the numbers and are affected psychologically by them. For example, before I bought the business, the previous owner would sticker the item as something like $15.49 less 10% (which was done at the till). I noticed customers never figured out the price they were paying. The day I took the business over, I discontinued the 10% off. Only had one customer notice and complain. One. And no drop in sales. This meant I just increased the profit margin of that item by approx. 25% based on a keystone markup.
Having the shipping inclusive of taxes again affects how expensive your shipping appears to be to customers. Remember - most customers don`t use any math.
The other issue with both these scenarios are they are not transparent with the taxes that the customer was truly charged which may be a big issue with the tax authorities. I remember reading the Saskatchewan requirements that their PST must be clearly broken out and shown on the customer`s receipt. And for a customer purchasing for their business needs, they need the taxes broken out so they can claim them as input tax credits. Nothing makes me quicker to anger if an invoice does not show the taxes or the business` tax number. Without either, I cannot claim input tax credits.
Best of luck.