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Shopify: Tax Items

A breakdown of Shopify's tax details and how Equali passes through tax items.

Shopify calculates tax for a number of tax jurisdictions based on your store's settings and provides "tax lines" for relevant orders.

It is your responsibility to consult a professional with expertise for each tax jurisdiction in which you operate, and to make sure you submit taxes correctly.

 

Tax Currency Conversion

Given that settlements are categorised and posted to your accounting system in the settlement currency, and orders are created using the presentment currency (the currency used by your customer at the checkout), Equali uses the FX rate provided by Shopify to convert any tax from Shopify.

You can see a breakdown of the "Tax Amount Total" (original/presentment currency) and the "Tax Settlement Amount" for any transaction by navigating to the Transaction Details page, which you can access by searching for any ID with the search bar, or by clicking any row on the Reconciliation List page. Taxes are broken down in the "Tax Item Breakdown" table. 

 

Tax Types

  • Shopify's integration primarily lists output VAT (e.g. on sales), as well as Customs / Import Duty. VAT is considered a "Tax Item" in Equali and is associated with its parent report item. Customs / Import Duty is provided as a separate report item.
  • Shopify does not provided tax on refunds after they have been processed, so Equali creates a proportional estimated tax refund. This is calculated for any report items that are not tax exempt (Shopify Custom Field 2), and based on the financial entry amount of the refund vs the sale to determine the proportional estimated tax refund amount. It is then converted into the settlement currency based on the parent report item's FX rate and settlement currency. 
  • Shopify does not provide tax on fees via their integration, so please check your Shopify invoices to adjust tax accordingly in your accounting system. 

 

Tax Jurisdiction & Name

Equali passes through the tax name, country and region from Shopify, where determined by Shopify. This is shown in the "Tax Item Breakdown" table on the Transaction Details page. 

 

Tax Posting

Tax is posted differently depending on your accounting system and your company's setup. 

  • FreeAgent: On loading the Settlements page or before an automated settlement is sent, Equali checks your company's VAT Registration Status in FreeAgent. 

    • Output VAT (any report item where Financial Entry Category is not “Fee”):
      • If your company is "VAT Registered" in FreeAgent, output VAT is linked to a parent report item on the Settlement Posting Summary on the Settlements page. It is included alongside the parent as part of the bank transaction explanation. Because the output row is linked to a parent item, it cannot be posted to FreeAgent separately and is not editable. 
      • If your company is not "VAT Registered" in FreeAgent, VAT is not included on any bank transaction explanations posts to FreeAgent, but it is still available as a tax item on the Transaction Details page in Equali if calculated by Shopify. 
    • Input VAT (any report item where Financial Entry Category is “Fee”):
      • Regardless of your company's VAT registration status in FreeAgent, input VAT is always passed alongside corresponding report items when posting a bank transaction explanation. Because the output row is linked to a parent item, it cannot be posted to FreeAgent separately and is not editable. 
  • Xero: On the Settlements page, tax is shown as a separate row on the Settlement Posting Summary. You can map tax to a corresponding Ledger Account ID (which maps to your Xero "Chart of Accounts") and post to your chosen account alongside other items in your settlement breakdown.