Shopify Canadian Tax Setup: The “Instead Of” vs “Added To” Mistake
One wrong toggle and every order silently eats your margin. Here’s how to set it up correctly.
The core mistake
Tax "instead of" silently destroys your margin
When you add a Canadian tax rate in Shopify, there is a setting that controls whether the tax is “added to” the product price (correct — customer pays price + tax) or “included in” the product price (tax-inclusive pricing — the tax comes out of your revenue). Choosing “included in” when you meant “added to” means every $100 sale on a 13% HST store is actually $88.50 in revenue and $11.50 in tax you owe — not $100 in revenue plus $13 in tax collected.
The second major setup error is applying the wrong rate to the wrong province — or applying your home province’s rate to every customer. Canada has 13 provinces and territories with different rates. A BC customer buying from an Ontario store should see 5% GST + 7% BC PST, not 13% Ontario HST.
Shopify’s automatic tax calculation handles the basic GST/HST province routing reasonably well — but it does not automatically handle BC PST, SK PST, MB RST, or QC QST registration requirements. You still need to register with those provincial authorities separately and verify Shopify has the rates configured correctly.
How to set it up
Correct Shopify tax configuration for Canada
“Included in price” — tax-inclusive, comes out of your revenue
Product price in Shopify: $100.00
HST at 13% included: tax = $11.50, your revenue = $88.50
Customer pays $100. You remit $11.50 to CRA. You keep $88.50.
Use this only if you intentionally want tax-inclusive pricing (e.g., displaying round numbers). Requires your prices to already be set to absorb the tax.
“Added to price” — tax on top, standard for Canadian B2B and most retail
Product price in Shopify: $100.00
HST at 13% added: tax = $13.00, customer total = $113.00
Customer pays $113. You remit $13 to CRA. You keep $100.
This is the standard setup for most Canadian stores. Your listed price is your revenue; tax is added at checkout.
The revenue difference over a month of sales
| Monthly orders | Avg order value | Revenue (added to) | Revenue (included in) | Monthly loss |
|---|---|---|---|---|
| 50 | $80 | $4,000 | $3,540 | $460 |
| 100 | $80 | $8,000 | $7,080 | $920 |
| 200 | $120 | $24,000 | $21,239 | $2,761 |
Based on 13% HST (Ontario) applied to all orders. Actual impact varies by province mix.
Correct tax configuration by province
| Province | Tax lines | Total | Shopify notes |
|---|---|---|---|
| Ontario | HST only | 13% HST | One tax line: HST 13%. Both portions collected together, remitted to CRA. |
| British Columbia | GST + PST | 12% | Two tax lines: GST 5% and BC PST 7%. PST requires separate BC registration. PST remitted to BC Ministry of Finance. |
| QuebecQST on base price only — not on GST-inclusive amount. | GST + QST | 14.975% | Two tax lines: GST 5% and QST 9.975%. QST requires separate Revenu Québec registration. QST is calculated on the base price, not on GST. |
| Saskatchewan | GST + PST | 11% | Two tax lines: GST 5% and SK PST 6%. PST requires separate SK registration. |
| Manitoba | GST + RST | 12% | Two tax lines: GST 5% and MB RST 7%. RST requires separate MB registration. |
| New Brunswick | HST only | 15% HST | One tax line: HST 15%. Remitted to CRA. |
| Nova ScotiaRate changed from 15% → 14% on April 1, 2025. | HST only | 14% HST | One tax line: HST 14%. Rate changed from 15% on April 1, 2025 — update Shopify if you haven't. |
| Newfoundland & Labrador | HST only | 15% HST | One tax line: HST 15%. Remitted to CRA. |
| Prince Edward Island | HST only | 15% HST | One tax line: HST 15%. Remitted to CRA. |
| Alberta | GST only | 5% | One tax line: GST 5%. No provincial tax. |
| YT / NT / NU | GST only | 5% | One tax line: GST 5%. No territorial tax. |
Free tool
Calculate your exact rate
Use our free Canadian sales tax calculator to get the answer for your specific situation — seller province, buyer province, and product type — with government sources cited.
Use the free calculatorShopify cannot register you for provincial taxes — you must do that yourself
Shopify’s automatic tax calculation will route GST/HST rates correctly for most scenarios. But collecting BC PST, SK PST, MB RST, or QC QST requires a separate registration with each provincial authority before you can legally collect those taxes. If you are not registered, you should not be charging those provincial rates — and if you are registered, you need to verify the rates are configured correctly in your Shopify admin.
- BC PST:BC Ministry of Finance — no minimum threshold for out-of-province sellers
- SK PST:Saskatchewan Finance — no minimum threshold for non-resident vendors
- MB RST:Manitoba Finance — register if you solicit MB customers
- QC QST:Revenu Québec — separate from CRA, required once over $30K
What most people get wrong
Common Shopify Canadian tax setup mistakes
"Included in price" set by accident on a non-tax-inclusive store
This is the silent killer. If your product prices were set assuming tax would be added on top and you accidentally enable "included in price," you are absorbing all the tax yourself on every order. It doesn't show up as an error — orders process normally, customers pay the listed price, and you only notice when your accountant reconciles and the numbers are off. Check your Shopify tax settings right now if you're unsure.
Applying your own province's rate to all customers
If your store is set up in Ontario and you apply 13% HST to every order regardless of where the customer is, you are overcharging customers in Alberta (should be 5% GST), BC (should be 5% GST + 7% PST if registered), and Quebec (should be 5% GST + 9.975% QST if registered). Shopify's automatic tax calculation is meant to handle this, but you need to verify it is actually enabled and the correct rates are loaded for each province.
Not updating Nova Scotia's HST rate after April 2025
Nova Scotia reduced its HST rate from 15% to 14% on April 1, 2025. If you manually entered provincial tax rates at any point — rather than relying on Shopify's automatic rates — your Nova Scotia configuration may still say 15%. Check and update it. Charging 15% when the correct rate is 14% means you're collecting 1% more than you should on every NS order.
Treating QST as automatically covered by CRA registration
Your CRA GST/HST number does not give you authority to collect QST. QST requires a separate registration with Revenu Québec. Many Shopify stores charge QST to Quebec customers without ever having registered — which means they're collecting a tax they're not entitled to collect and may face penalties from Revenu Québec. Either register for QST or don't charge it.
Not exempting exempt product categories
Shopify's default is to apply tax to every product. Some products are tax-exempt or zero-rated in Canada: basic groceries, certain children's clothing, prescription drugs, and others. If you sell these and haven't marked them as tax-exempt in Shopify's product tax settings, you are overcharging customers and collecting tax you are not entitled to. Ontario also has point-of-sale rebates on specific items (children's clothing, books, diapers) that rebate the 8% provincial HST portion at checkout.
Using Shopify's "default" tax class for everything
Shopify has product tax categories. If all your products are tagged with the default, they'll all be taxed the same way — which is wrong if you sell a mix of taxable goods, zero-rated goods, and exempt goods. Take 20 minutes to go through your product catalogue and assign the correct tax class to any product that isn't straightforwardly taxable physical goods.
Summary
Key takeaways
"Added to price" means tax is on top — customer pays price + tax, you keep the price. This is standard for most Canadian stores.
"Included in price" means tax is inside — customer pays the listed price, and part of it goes to the CRA. Use only if your prices are intentionally tax-inclusive.
The customer's province determines the rate, not yours. Shopify's automatic tax calculation handles this for GST/HST — verify it is enabled.
BC PST, SK PST, MB RST, and QC QST require separate provincial registrations that Shopify cannot do for you.
Nova Scotia HST changed from 15% to 14% on April 1, 2025. Update any manually entered rates.
QST requires a Revenu Québec registration — your CRA number does not cover Quebec.
Mark exempt and zero-rated products in Shopify's product tax settings — the default applies tax to everything.
Ontario has point-of-sale rebates on children's clothing, books, and diapers — the 8% provincial portion is rebated at checkout for qualifying items.
Free tool
Calculate your exact rate
Use our free Canadian sales tax calculator to get the answer for your specific situation — seller province, buyer province, and product type — with government sources cited.
Use the free calculatorGovernment sources
Sources
The tax rates and rules Shopify should reflect are defined by official government publications. Always verify current rates directly — not from Shopify’s documentation, which may lag behind legislative changes.
- GST/HST — which rate to charge
Canada Revenue Agency
- Place of supply — practical guide
Canada Revenue Agency
- PST Bulletin 001 — Registering to Collect PST
BC Ministry of Finance
- PST Bulletin 105 — Software (SaaS, IaaS, APIs)
BC Ministry of Finance
- Provincial Sales Tax (SK PST)
Saskatchewan Finance
- Retail Sales Tax (MB RST)
Manitoba Finance
- QST — basic rules for applying GST/HST and QST
Revenu Québec
Keep reading
Related guides
GST vs HST: What's the Difference for Canadian Businesses?
Full rates table for all 13 provinces, invoice examples, and why the customer's province determines the rate.
Do I Charge PST When Selling to British Columbia?
BC PST covers physical goods, SaaS, and certain services — with no minimum threshold for out-of-province sellers.
Canadian Invoice Tax Lines: What You're Required to Show
HST provinces want one line. PST provinces want two. Quebec requires specific registration numbers. Here's what goes on every invoice.
Disclaimer
TaxMapCA provides tax information, not tax advice. This article is for general informational purposes only and does not constitute legal or accounting advice. Shopify’s platform features and automatic tax settings change frequently — always verify your store’s configuration against current government sources and Shopify’s own documentation. TaxMapCA is not affiliated with or endorsed by Shopify, the Canada Revenue Agency, Revenu Québec, or any provincial tax authority. For complex situations, consult a qualified CPA or tax professional.