[Not a bug] Tax bug - 1.3.9d - for country states different to where the shop is

Under Taxes -> Zone definitions
I have 1 tax zone definition set up (Australia)

Within that "Australia" zone that I have created I have 1 sub zone
-> Country = Australia, Zone = All Zones.
(I've also tried listing every state of australia individually as a sub zone of Australia so my Australia zone had 8 (state/territories) sub-zones.

Under Taxes -> Tax Classes
I have one tax class called "GST"

Under Taxes -> Tax Rates
There is 1 tax rate.
Tax Class Title=GST
Zone=Australia
Tax rate=10%
Description=GST
Priority=1
(It was originally Priority=0 - neither seems to change the result).

All my items in my shop have my tax (GST) applied to them.

When a customer signs up to my shop, if they are in the same country state (New South Wales) as my shop, everything works correctly.
However, if the customer's address is in a state/territory of Australia that is not New South Wales, prices in the shop show up without the 10% GST supplied. Also, when they go to checkout, the tax=0.00%, price(inc) and price(ex) are identical (ie. the non-tax price which is 10% lower).

I can reproduce the problem by creating a new account for my store where the state of the country is not New South Wales, then viewing any item - they show without the tax, so it's not something that only applies to the checkout.

In case this was a problem with the zone I created ("Australia") being called the same as the name of the country, I just tried
Creating a new zone called "AustraliaTaxZone"
Making the subzone "All Countries / All Zones"
Then making my "GST" tax applicable to the zone "AustraliaTaxZone"

So now, in theory, anyone in the world should have the 10% tax applied.
I've then created 2 test accounts, one in my home state (Australia->NSW) and another in a different state (Australia->QLD).
When you log into the where the state is listed as NSW (where my shop is) shows the right prices for the items in my shop, the account based in the state of QLD shows the prices without tax.

Damn! Just figured out the cause. I can see why it didn't work, but I think the way it works is wrong (or at best, the terms used are ambiguous)

My "Basis of Product tax" / "Basis of shipping tax" items were set to "Store" rather than "Shipping"

There is a problem here as my tax zone definition includes all the states of Australia, so therefore when you sign up as a user in a different state, you should be considered in the same zone, (ie. the one zone containing ALL the states) and therefore the tax rate should have been applied.

I can see why this might not be considered a bug though, so I suggest the following.

Can you please change some of the places where the term "Zone" is used to something like "State/Territory"? When you configure your store you set up a Country and a Zone - which for me is a State.

Then, when you set up a zone for tax reastons, you create a zone name (which could be anything and isn't necessarily a state/territory like the last zone had to be), but that zone contains sub-zones which in turn contain zones (ie. state/territory). Having a zone containing a sub-zone containing a zone to me suggests that at least one of those "zones" should be called something else.

Zones can be used for many things, including taxes, and shipping and shipping restrictions, and payment module restrictions, and more. That's why you can define your own "Zone Definitions" in the "Zone Definitions" section of the admin area. It's up to you how you choose to use each one, whether for single purposes or shared.
If we were to rename them to "State/Territory" then that would be inaccurate since that's not necessarily what they're used for.

I can see that, it just gets very confusing when you have a zone, containing a subzone, which contains a zone and the two "zones" have two different meanings (one is whatever you want it to be, the other is a state/territory/etc, yet they're called the same thing).