Taxes Missing or Incorrect in Xero

Post to Xero copies the tax from each Shopify order. By default, an order with tax posts to Xero using your Tax on Income rate, and an order with no tax uses your Tax Free Income rate (for example, GST Free Income in Australia). Here are a few possible reasons why taxes may be missing or incorrect in Xero.

Check the Shopify Order First

Open the order in your Shopify admin and look at the totals for a tax line, such as GST. If the order shows no tax, Xero is showing exactly what Shopify charged, and the fix is in Shopify: see Product is set to Tax Exempt and Taxes and Duties below. If the order does show tax but Xero doesn’t, check Tax on Income & Tax Free Income.

Tax on Income & Tax Free Income

1. Open the Post to Xero app.
2. Navigate to the Setup - Xero section.

3. Under Default Settings, ensure that your Tax on Income and Tax-Free Income are set according to your tax requirements.

Product is set to Tax Exempt

1. Log in to your Shopify Admin Panel.
2. Go to Products from the left-hand menu.

3. Click on the product that is causing the tax error.

4. Scroll down to the Pricing section.
5. Check whether the Charge tax on this product checkbox is ticked to ensure that taxes will be applied to the product.

Taxes and Duties

If your products are set to charge tax but your orders still show no tax, Shopify may not be collecting tax in your country.

1. Log in to your Shopify Admin Panel.
2. Navigate to Settings located at the bottom left.
3. Select Taxes and duties.

4. Under Tax regions, find your country and check the Collecting column. If it shows a dash instead of Taxes, Shopify isn’t collecting tax there.

5. Click your country. In its tax collection section (for example, GST collection), click Collect in new region and follow the prompts. More information can be found here: Taxes and duties.

Before you start collecting, check Include sales tax in product price and shipping rate under Additional configuration on the same page. Tick it if your prices already include tax. If it stays unticked, Shopify adds the tax on top of your prices at checkout. If tax applies to your shipping, also tick Charge sales tax on shipping.

These changes apply to new orders only. Orders already posted to Xero keep the tax they had in Shopify, so any correction to those needs to be made in Xero.

Tax Added on Top of Your Prices

Shopify either includes tax in the prices you set, or adds it on top at checkout. If you’ve switched on tax collection but your prices are still set to exclude tax, customers pay more than your listed price. For example, a product listed at $25 in Australia comes to $27.50 at checkout. Xero shows the same $27.50, because Post to Xero copies what Shopify charged.

To check an order, open it in your Shopify admin. If the total is the subtotal and shipping plus the tax, the tax was added on top. In Xero, the invoice shows Amounts are: Tax exclusive.

If your listed prices are meant to include tax:

1. Log in to your Shopify Admin Panel.
2. Go to Settings, then Taxes and duties.
3. Under Additional configuration, tick Include sales tax in product price and shipping rate.

You don’t need to change anything in Post to Xero. Each invoice follows how its order was charged, so new orders come through as tax inclusive, and orders already in Xero stay as they are. If you use summarised invoices, email us at help@hyvelabs.co after making this change so we can check your summary settings.

Payment gateway

1. Open the Post to Xero app.
2. Navigate to the Setup - Payouts section.

3. Select the Payment Gateway you want to modify by clicking on More.
4. Ensure that the Payment Gateway Fee is filled in only if applicable, and that the Xero Fee Account and Xero Fee Tax Rate is set according to your requirements. You can obtain the fees from the payment gateway provider directly or from your statement.

If you still experience issues with taxes missing or appearing incorrectly after trying all the possible solutions, feel free to reach out to us at help@hyvelabs.co.