Canadian Tax Guidelines

The following example shows how to set up GST tax rates for Canada and PST tax rates for Saskatchewan, with tax rules that calculate and display the two tax rates. Because this is an example configuration, be sure to verify the correct tax rates and rules for your tax jurisdictions. When setting up taxes, set the store scope to apply the configuration to all applicable stores and websites.

  • Fixed product tax is included for relevant goods as a product attribute.
  • In Quebec, PST is referred to as TVQ. If you need to set up a rate for Quebec, make sure to use TVQ as the identifier.

Step 1: Complete Tax Calculation Settings

  1. On the Admin menu, select SystemConfiguration. Then in the panel on the left, under Sales, select Tax.

  2. Click to expand each section, and complete the following settings:

Tax Calculation Settings

Field Recommended Setting
Tax Calculation Method Based On Total
Tax Calculation Based On Shipping Address
Catalog Prices Excluding Tax
Shipping Prices Excluding Tax
Apply Customer Tax After Discount
Apply Discount on Prices Excluding Tax
Apply Tax On Custom Price (if available)

Tax Classes

Field Recommended Setting
Tax Class for Shipping Shipping (shipping is taxed)

Default Tax Destination Calculation

Field Recommended Setting
Default Country Canada
Default State (as appropriate)
Default Postal Code * (asterisk)

Shopping Cart Display Settings

Field Recommended Setting
Include Tax in Grand Total Yes
Display Full Tax Summary Yes
Display Zero in Tax Subtotal Yes

Fixed Product Taxes

Field Recommended Setting
Enable FPT Yes
All FPT Display Settings Including FPT and FPT description
Apply Discounts to FPT No
Apply Tax to FPT Yes
Include FPT in Subtotal No

Step 2: Set Up Canadian Goods & Services Tax (GST)

To print the GST number on invoices and other sales documents, include it in the name of the applicable tax rates. The GST will appear as part of the GST amount on any order summary.

Manage Tax Zones & Rates

Field Recommended Setting
Tax Identifier Canada-GST
Country Canada
State * (asterisk)
Zip/Post is Range No
Zip/Post Code * (asterisk)
Rate Percent 5.0000

Step 3: Set Up Canadian Provincial Sales Tax (PST)

Set up another tax rate for the applicable province.

Tax Rate Information

Field Recommended Setting
Tax Identifier Canada-SK-PST
Country Canada
State Saskatchewan
Zip/Post is Range No
Zip/Post Code * (asterisk)
Rate Percent 5.0000

Step 4: Create a GST Tax Rule

To avoid compounding the tax and to correctly display the calculated tax as separate line items for GST and PST, you must set different priorities for each rule, and select the “Calculate off subtotal only” checkbox. Each tax appears as a separate line item, but the tax amounts are not compounded.

Tax Rule Information

Field Recommended Setting
Name Retail-Canada-GST
Customer Tax Class Retail Customer
Product Tax Class Taxable GoodsShipping
Tax Rate Canada-GST
Priority 0
Calculate off subtotal only Select this checkbox.
Sort Order 0

Step 5: Create a PST Tax Rule for Saskatchewan

For this tax rule, make sure to set the priority to 0 and select the Calculate off subtotal only checkbox. Each tax appears as a separate line item, but the tax amounts are not compounded.

Tax Rule Information

Field Recommended Setting
Name Retail-Canada-PST
Customer Tax Class Retail Customer
Product Tax Class Taxable GoodsShipping
Tax Rate Canada-SK-PT
Priority 1
Calculate off subtotal only Select this checkbox.
Sort Order 0

Step 6: Save and Test the Results

  1. When complete, click the Save Config button.

  2. Return to your storefront, and create a sample order to test the results.