Feature Spotlight: Applying Tax to Shipping Rates

Between Goods & Services Tax, Provincial Sales Tax, and Harmonized Sales Tax, getting your shipping tax set-up correct in Canada can be pretty confusing:

• Goods & Services (GST):
  • Everything imported into Canada is subject to GST @ 5%. The GST is calculated after customs duties have been applied.
• Provincial Sales Tax (PST):
  • This can vary from province to province, as do the goods and services to which the tax is applied and the way the tax is applied.
• Harmonized Sales Tax (HST):
  • This is currently charged at 13%, but only in New Brunswick, Nova Scotia, and Newfoundland and Labrador and is applied in these states rather than separate a GST and PST.

What makes things even more difficult is that the current version of RMS does not support tax on shipping! So how can you, as a dutiful and law abiding RMS-powered store owner apply these various taxes? The answer lies with NitroSell eCommerce! We have overcome the problem with a new WebStore Manager feature titled Enable Tax on Shipping.

The 6 Step Shipping Tax Solution – an Advanced Example:

Let’s use the following Canadian based example.

Example (and crazy!) tax rates:

• HST: 10%;
• GST: 20%;
• PST: 25%.

Test Cases:

• Ontario – charge GST and PST on Shipping;
• Nova Scotia, new Brunswick or Newfoundland, Canada – charge HST on Shipping;
• Any other Province in Canada – charge GST on Shipping;
• Any country outside of Canada – do not charge tax on shipping.

Steps:

1. Create a new item with Item Lookup Code shipping in your RMS item list. This non-inventory item must exist in your point-of-sale at the time of processing the order for the WSM option to work correctly;
   

   RMS Shipping Item

2. Set-up your Customer Tax, Sales Tax, and Item Tax options and Item Options in Store Ops Manager. This can tricky, so make sure to zoom into the screen shot below if you need more detail;
   

   RMS Store Operations: Tax Assignment to the Shipping Item

3. Ensure that your store configuration is set to assign tax schedules on a per item basis:
   

   RMS Store Operations: Tax Method and Basis

4. Synchronize these changes to your web store, and log into your WebStore Manager. If you browse to the Shipping Options tab, you should find the Enable Tax on Shipping option available to you. A related knowledge base (KB) article can be found here that goes through all the options in detail.
   

   Enable Tax on Shipping Option on the WebStore Manager

5. Configure your shipping & tax options in your Web Store Manager as required.  Here, you will see the flexibility of NitroSell eCommerce because you can set up the options to meet as many tax-on-shipping requirements as you need. Try out the test cases above for yourself!
   

   Tax Configuration for Canada and Ontario on the WSM

6. Now you can test your new tax on shipping configuration. In our test, we shipped an item worth $100 to Ontario with a shipping cost of $97.10. Notice how the tax correctly calculated the GST + PST shipping tax configuration;
   

   GST and PST Charged for Ontario at Checkout

Please note: this feature is currently available on the Early Adopters’ version of the webstore!