Configuring Taxes for Canadian Sites/Zones

For all Canadian stores....Effective January 1, 2008, the rate of the GST and the federal component of the HST will be reduced from 6% to 5%. The provincial component of the HST will remain at 8%. This means that the rate of HST will be reduced from 14% to 13%. Please note that the HST applies only to purchases made in or imported into New Brunswick, Nova Scotia, and Newfoundland and Labrador (the participating provinces) and the GST applies to supplies made in the rest of Canada.

I always found it interesting that the gov't presumes we all watch tv or that the news will trickle down to everyone eventually. Thanks for posting because some may not have known. But isn't it a bit odd that for something as important as that, that they don't individually notify GST registered businesses by mail? In a way, I'm glad they don't (waste of paper) but there's probably a lot of small businesses that don't catch the change right away and that could screw up accounting later. Then again, the entire tax system is developed to keep accountants employed :)

Cheers and happy newyear.

• Steven

For the first 2 weeks everything was working fine with the TOTAL including all taxes, but for some reason since last night, CANADIAN TAX calculations have come out wrong...

Tax Class: GST/PST/HST Class
Net Price is set at $139.00 <<< my product
Gross Price ends up at: $157.07 < Stores calculations incorrect

When i change the $157.07 which is incorrect, to 157.63 <CORREECT
the NET PRICE changes to : 139.4867 ????????????

It should be 139.00 + GST 5% 6.95 =145.95
plus PST 8% 11.676= 157.626 = FINAL PRICE $157.63

also my GST and PST taxes numbers which should show up on the invoice does not.. i get a pretty plain jane TOTAL. THATS IT...

:censored: lol

ALSO.. i have no idea how u edit this!

==============
The following SQL statement would be helpful:

Code:

UPDATE products SET products_tax_class_id = 1 WHERE products_model NOT LIKE 'GIFT%';

(you'd need to confirm that the desired products_tax_class_id = 1, first )
================================================== ======

?????????????:wacko:

Umm... you're wrong, its right. $157.07 is absolutely correct. $139 * 1.13 = $157.07

Not sure how you're doing your math, but its wrong. Oh, Actually I see... you are taxing a tax. You do NOT add the PST to the Amount + GST. GST and PST are INDEPENDENTLY calculated on the item amount. The easiest way is to just add the percentages and multiply like I did above.

Anyway, trust me (and the rest of the Canadian accountants) that the shop's method of calculating is correct. It was 2 weeks ago, and it is now.

Cheers.

• Steven

s_mack:

Umm... you're wrong, its right. $157.07 is absolutely correct. $139 * 1.13 = $157.07

Not sure how you're doing your math, but its wrong. Oh, Actually I see... you are taxing a tax. You do NOT add the PST to the Amount + GST. GST and PST are INDEPENDENTLY calculated on the item amount. The easiest way is to just add the percentages and multiply like I did above.

Anyway, trust me (and the rest of the Canadian accountants) that the shop's method of calculating is correct. It was 2 weeks ago, and it is now.

Cheers.

• Steven%

Hi steven.. prefect timing... yes.. I have been told to calculate the taxes as so..

139.00 my product

• 5% GST 6.95 = 145.95 + 8% 11.676 = 157.63

Been told to add on the 8% PST ontop of the 5% GST including the product total.

other wise 13% equals $157.07

Btw im in Quebec...

perhaps u might know also, why isnt my GST NUMBER or PST numbers i included showing up

currently i only get this...
Sub-Total: $139.00.
Tax: $6.95.
Total: $145.95.

=================================
I do not get the following *btw i do not have shipping set up, since i ship directly from overseas to my clients..

Sub-Total: $69.00
Per Item (Best Way): $10.00
8.0% PST (Ontario) + 7.0% GST # 86179 1655 RT0001: $10.35 <<<<<<<<
7.0% GST (shipping) + 8.0% PST (shipping): $ 1.50
Total: $90.85

You're awesome. This helps a lot.

I am having problems setting up the taxes I live in Saskatchewan and ship across Canada.
I sell two kind of products:

Books (exempt from PST in SK) that need GST in Canada
Books that need HST in Eastern Canada
Courses that need PST and GST in SK
Courses that need GST in Canada
Courses that need HST in Eastern Canada

I set everything up like the first post but unfortunately it doesn't allow me to PST exempt from SK. I know I'm missing a step but don't know what it is.

Any ideas?
:frusty:

Your situation is more complex, but still doable. You'll have to set up extra tax classes I think. When I have more time I'll think carefully about how you need to do it. Maybe DrByte can answer - he seems to be the expert on this :)

thanks! I'll wait for your reply.
I tried adding an extra TAX CLASS called "GST only" and then created a new tax rate for "GST only" and set the tax rate at 5% GST (for SK buying books and audios) but when I tested it I get GST and GST so I deleted it for now.
Currently I have the following set up:

ZONE DEFINITIONS
Canada GST Zone GST (except Eastern Canada: NS, NB, NL)
Eastern Canada - HST Zone NS, NB, NL
Saskatchewan PST Zone PST (only when shipped to Saskatchewan)

TAX CLASSES
GST on Shipping
GST/HST/PST Class

TAX RATES:
GST on Shipping Eastern Canada - HST Zone 13%
GST on Shipping Saskatchewan PST Zone 5%
GST on Shipping Canada GST Zone 5%
GST/HST/PST Class Eastern Canada - HST Zone 13%
GST/HST/PST Class Canada GST Zone 5%
GST/HST/PST Class Saskatchewan PST Zone 5%

Wondering if anyone can help me with the last thread...:frusty:

I really like your set up, but was wondering what do you set the priorities to for each tax rate??

sn_tobin:

I really like your set up, but was wondering what do you set the priorities to for each tax rate??

priorities don't really apply in Canada because we don't tax taxes. So set them all to 1. Taxes are applied independently in this country. In some countries, you add one tax to the amount, and then another to that total amount (including the first tax).

blf:

Wondering if anyone can help me with the last thread...:frusty:

I think you should have something like this:

ZONE DEFINITIONS
(yours are correct)

TAX CLASSES:
Shipping Tax
Taxable Goods
Books

TAX RATES:
Taxable Goods Canada GST Zone 5.00%
Taxable Goods BC PST Zone 7.00%
Taxable Goods Eastern Canada HST Zone 13.00%
Shipping Tax Canada GST Zone 5.00%
Shipping Tax BC PST Zone 7.00%
Shipping Tax Eastern Canada HST Zone 13.00%
Books Canada GST Zone 5.00%
Books BC PST Zone 0.00%
Books Eastern Canada HST Zone 13.00%

In other words, I think you need to add a "Books" class (and then define rates for it). Then, in your products setup pages make sure you choose the correct tax class! Books get the "Books" class and your courses get "taxable goods" class.

I think that's right... again, I wish Dr.B could confirm as he knows the system way better it seems.

• Steven

Hi,

The above tax calculation of GST and PST for Ontario is not done the right way. The GST is first added to the cost and then the PST is added to the cost +GST. In the calculation shown below:

Shipping to Ontario:

Sub-Total: $69.00
Per Item (Best Way): $10.00
8.0% PST (Ontario) + 5.0% GST #99999 9999 RT0001: $8.97
5.0% GST (shipping) + 8.0% PST (shipping): $ 1.30
Total: $89.27

the tax is taken as 5% of $69.00 = $3.45 + 5% of $69.00= $5.52 which is equal to $8.97 which is not the right tax calculation as done in Canada. It should be 5% of $69.00 =$72.45(69+3.45) + 8% of 72.45= $78.24(72.45+5.79)
Tax on shipping would be 10+5% + 8%=11.34
The total would be 78.24+11.34=89.58.

Indicana

You are 100% incorrect Indicana. Check with an accountant.

We do NOT tax taxes in (most of*) Canada! The 5% and 8% are calculated independently, not compounded as you have it. You have been (illegally) ripping off your customers if that's the way you've been doing it.

If you don't believe me, then check with an accountant or your local tax office. Or just check any receipt you've ever gotten from any company that's likely to do it correctly.

• There are a couple exceptions. Quebec goes back an forth on this over the decades... I'm not sure what they're at right now. Seems to me PEI compounds their sales tax. Ontario DOES NOT!

Here's a source: http://en.wikipedia.org/wiki/Sales_taxes_in_Canada

As you can see, only Quebec and PEI compound taxes. The rest are calculated independently.

Granted, that's wikipedia and not an official source. And I'm the first to acknowledge that wikipedia is a terrible source if you need to be SURE its right, but in this case I know it is :)

• Steven

s_mack:

You are 100% incorrect Indicana. Check with an accountant.

We do NOT tax taxes in (most of*) Canada! The 5% and 8% are calculated independently, not compounded as you have it. You have been (illegally) ripping off your customers if that's the way you've been doing it.

If you don't believe me, then check with an accountant or your local tax office. Or just check any receipt you've ever gotten from any company that's likely to do it correctly.

• There are a couple exceptions. Quebec goes back an forth on this over the decades... I'm not sure what they're at right now. Seems to me PEI compounds their sales tax. Ontario DOES NOT!

You are right. I just checked with Revenue Canada and they confirmed that you cannot collect tax on tax. Anyway as I am just starting my online sales I haven't ripped off any of my customers. Thanks anyways for the correction.

Hi Zenners,

I followed the Canadian Taxes tutorial to the letter but I've encounter problems I can't sort.

There seems to be a problem trying to get the prices to show correctly once I activate the GST/HSTPST tax class on a product. This is what I'm getting:

Products price (net) $1.5873
Products price (gross) $2.00

This isn't correct. I want the gross to be show as $2 with the GST included to this figure. But 1.5873 plus the GST doesn't make $2.00. Whats going on?

Cheers in advance!

Hello Zenners,

It's me again. I'm in the process of configuring the GST etc using the very thorough tutorial but I'm a bit confused on the "Leave PRIORITY at "1" for a non-cumulative tax (i.e. Ontario)" issue. My business is based in Red Deer, Alberta. Do I use Priorty as '1' or not?

Any help would be appreciated!