A mandatory task for any e-merchant in Canada is setting up your tax rules. Before we go into how to actually setup your Canadian sales tax in Magento, it’s good to know what taxes you need to collect in the first place. I break each store we work with up into the following scenarios/buckets:
American Based Company
Need not worry about charging Canadian sales tax.
Canadian Based Company
A) Do you sell products that are GST only taxable?
There are certain product categories that are PST exempt. These products need to be identified so that you can charge a customer the appropriate amount. Example: Certain baby-related products like car seats are PST exempt. So if your customer is in Ontario, you need to charge that customer only 5% federal tax (GST), NOT the full 13% HST.
B) Do you sell products that are GST+PST / HST taxable?
This is the most common type of product being sold. Almost everything you sell requires both PST + GST (or HST in some provinces).
So, let’s do a quick video demo of how to get these taxes setup in a brand new Magento installation. I have a CSV file that has the necessary Canadian tax rates that we’ve used on past customer stores. We’ll import this CSV file in the video to short-cut having to manually create all the provincial/federal tax rates. You can download it here if you’d like.[Update] – New File Format for Magento CE 1.6+, EE 1.11+