Note: This article is for illustrative purposes only. Although we have attempted to present this information as accurately as possible, it is your responsibility to verify these rates and calculations and to collect and remit taxes. CoffeeCup Software cannot be held responsible for any errors you may make. Be sure to check with your local taxing authority for the proper seller permits and/or business license(s). Penalties for not submitting taxes can vary from region to region.
If you have any comments or suggestions about the information in this article, please contact us.
Tax Configuration for Canada
Canada has three different kinds of taxes:
- The federal Goods and Services Tax (GST), which is currently 5%.
- The Provincial Sales Tax (PST), which varies between provinces and may have different rates within a province for specific products (e.g. alcohol).
- The Harmonized Sales Tax (HST), which replaces the federal Goods and Services Tax (GST) and the Provincial Sales Tax (PST) in certain provinces.
A combination of these taxes leads to one final tax rate depending on where you are shipping from and shipping to. Therefore, it's only necessary to configure one category (labeled Province Tax) in your tax table, unless you sell products that require a different PST, such as alcohol. In that case, you will need to add a Special Product Tax category and apply that tax when the product with the different PST is selected. For more information about Canadian tax rates, read this Wikipedia article.
To set up your tax table in Shopping Cart Creator, click the Taxes button and click Edit Location. This opens the Location Manager. Add each Canadian province and one location labeled International. When you are done, click OK. Next, click Edit Category and change State Tax to Province Tax. The next step is to fill out the different values for the Province Tax category according to these guidelines:
- Taxes are not applied to international sales that are shipped outside the country. In your tax table, enter 0% for the International location.
- For sales inside your province, either the GST and PST or the HST apply. Here are the rates you should enter for the province where you live:
- *Manitoba: 12%
- *Nova Scotia: 13%
- *Quebec: 12.875 % (Quebec charges the "tax on tax," so instead of adding up the PST and GST, the rate is calculated as follows: (1+7.5/100)*(1+5.0/100)-1=12.875%.)
- *Alberta: 5% (Alberta does not have a PST, so only the GST applies.)
- For sales that are inside Canada but outside your province, either the GST or HST apply. For instance, if you live in Quebec and sell and ship to a customer in British Columbia, only the GST applies. In this case, you would enter 5% in your tax table for British Columbia. If you live in Quebec and sell and ship to a customer in New Brunswick, only the HST applies. In this case, you would enter 13% in your tax table for New Brunswick. For more information about what tax rates to use where, refer to this Wikipedia article.
Most of the time, the same tax rules are applied to shipping. Use the previous guidelines to fill in the Shipping column of your tax table.
Tax Configuration for the United States
The general rule in the United States is that the state sales tax only applies if you sell and ship to a customer in your own state. For more information about U.S. tax rates, read this Wikipedia article.
To set up your tax table in Shopping Cart Creator, first click the Taxes button and click Edit Location. This opens the Location Manager. Add each U.S. state and one location labeled International. When you are done, click OK. The next step is to fill out the different values for the State Tax column. These guidelines should help you out:
- Taxes are not applied to international sales that are shipped outside of the country. In your tax table, enter 0% for the International location.
- Taxes are usually not applied to out-of-state sales that are shipped outside of your state. We say "usually" because there are tentative plans to change that rule, as you can read here: The State of the Internet Sales Tax. Also, if you have some sort of physical presence in the state you are shipping to, you are supposed to collect sales tax. For now, though, it is safe for most people to enter 0% for all states that they are not selling or shipping from.
- When you sell and ship inside your state, you are supposed to collect sales tax (although certain goods are exempt from this rule). For example, if you are selling and shipping from Georgia to someone in Georgia, you are supposed to collect the 4% state tax rate. You should check the exact rules, regulations, and exempt products with your state authorities.
Note: For the U.S., you could configure only two locations and achieve the same result. For example, you could have one location for your state, and another called Other. Alternately, you could be more specific by applying specific rates for specific cities or counties and labeling the rest Other.