How to Setup GST/HST/PST for Canadian Wholesale Orders in Shopify

While working with our clients, we know it is crucial to ensure compliance with legal regulations when setting up taxes for a digital platform like Shopify. Several of our clients engage in product sales within Canada, where the applicable sales taxes encompass the Goods and Services Tax (GST), the Harmonized Sales Tax (HST), and the Provincial Sales Tax (PST). When managing wholesale orders, it is imperative to accurately collect the correct taxes. This article provides a step-by-step guide on how to set up GST/HST/PST for Canadian wholesale orders in Shopify.

1. Understanding Canadian Sales Taxes

Before diving into the setup, it’s essential to understand the difference between GST, HST, and PST:

• GST is a federal tax levied on the sale of most goods and services in Canada.
• HST combines the federal GST and the provincial PST in provinces that have harmonized their sales taxes.
• PST varies from province to province in non-HST participating provinces.

2. Accessing the Shopify Tax Settings

• Login to your Shopify dashboard.
• Navigate to Settings and then click on Taxes.

3. Setting Up GST/HST/PST for Wholesale

• Add Canada as a Tax Region:
  • If you haven’t already added Canada, click on the “Add Country” button and select Canada.
• Specify the Rates:
  • Under Canada, you’ll find options to set tax rates for each province.
  • For provinces like Ontario, which uses HST, you can enter the combined HST rate.
  • For provinces like British Columbia, which has both GST and PST, enter the GST rate under the GST column and the PST rate under the PST column.
• Setting Up Tax Exemptions for Wholesale:
  • If certain wholesale products are tax-exempt or taxed differently, you can specify these exemptions.
  • Go to Products in your Shopify dashboard.
  • Click on the product you want to modify, then click Edit.
  • In the “Pricing” section, uncheck the “Charge taxes on this product” option if the product is entirely tax-exempt.
  • Use apps like “Exemptify” to set specific tax exemptions or rates for certain products or customers.

4. Consider Wholesale Tax Settings for Different Provinces

Different provinces might have variations in tax exemptions or reductions for wholesale orders:

• Determine if specific provinces offer reduced or exempt rates for certain wholesale products.
• Adjust the tax rates manually for these products in Shopify or use specialized apps to automate this process based on provincial rules.

5. Automate Tax Calculations

Consider integrating apps like Avalara or TaxJar. These can automatically calculate and update tax rates based on your business’s needs and the latest tax laws.

6. Document and Verify

Always keep a record of all your transactions:

• This assists in verifying that taxes were applied correctly.
• Periodically review and ensure compliance with the latest tax regulations.
• Regularly check the Canada Revenue Agency (CRA) website or consult with a tax professional to stay updated on any changes to tax rates or rules.

Setting up GST/HST/PST for Canadian wholesale orders in Shopify is essential for compliance and accurate financial reporting. While Shopify makes this process relatively straightforward, we firmly believe in the importance of staying updated on the latest tax laws and regulations as they can change. Furthermore, consult with a tax professional or accountant familiar with Canadian sales taxes to gain additional peace of mind and clarity.

Here are some additional things we found that you should keep in mind:

• You are only required to collect GST/HST/PST on wholesale orders if the total value of the order is more than $30,000.
• You are not required to collect GST/HST/PST on orders that are shipped to a business address.
• You may be required to collect other taxes, such as provincial sales tax, depending on the province where you are located and the province where the customer is located.