Yes, of course it does... and yes, that is how mine is set up (except you are missing HST on shipping to Atlantic provinces). That is how it should be set up for ALL BC-based stores. And following the original steps of this thread produces that for me just fine, so I don't know what the problem is.

You don't need more than one shipping tax class... you just need multiple tax rates for that class, based on zones.

I know you're saying you went through it... but all I can suggest is you do it again more carefully. Just (obviously) substitute BC for Ontario, and 7% PST instead of 8%.

You WILL end up with PST+GST being charged appropriately on shipping within BC and GST only being charged on the other provinces (except Atlantic which will, correctly, be charged HST) and no tax on International shipments.

There doesn't appear to be anything special about your circumstances so it will work for you if the settings are exact.

- Steven