What the tax does to your price
For a furniture sale, keep three amounts distinct: the furniture price, the GST/HST charged on that sale, and the total the customer pays. The furniture price is the amount assigned to the product or service before the tax line is added. GST/HST is calculated on the taxable sale and collected from the customer. The total is the amount charged at checkout or shown on the invoice after combining those two amounts.
For illustration only, if a table has a furniture price of $1,000 and the calculated tax is $130, the customer pays $1,130. The $1,000 describes the sale of the furniture; the $130 is tax collected; and $1,130 is the payment received from the customer. Treating the full payment as the furniture sale can overstate product revenue in your reporting.
For store decisions, use the furniture price to assess what customers are paying for the product, the tax amount to reconcile the tax collected, and the total to check the customer’s payment and checkout communication. The applicable GST/HST can depend on where the order is delivered, so the tax line should be calculated for the transaction rather than assumed from the product alone.
| Amount | What it represents | Use it to |
|---|---|---|
| Furniture price | The product sale before GST/HST | Assess product pricing and sales value |
| GST/HST charged | Tax collected from the customer | Reconcile the tax amount |
| Total paid | Furniture price plus GST/HST | Check the customer’s checkout or invoice amount |
Inclusive and exclusive prices
A tax-exclusive price shows the furniture amount before GST/HST. It is useful for internal reporting, margin analysis and supplier or trade quotes, because the tax collected is not store revenue. Use it when comparing products, promotions or collections on the same pre-tax basis.
A tax-inclusive price shows what the customer pays after the applicable GST/HST is added. It is useful on customer-facing product pages and checkout when you want shoppers to understand the cash amount required. For an Ontario delivery, where the Canada Revenue Agency lists a 13% HST rate, a $1,000 exclusive price becomes $1,130 inclusive ($1,000 × 1.13). Reversing it gives $1,130 ÷ 1.13 = $1,000 before tax.
Quotes can show both figures: the exclusive line price, the GST/HST amount and the inclusive total. That makes discounts and tax easy to audit without forcing the customer to calculate. At checkout, apply the rate for the delivery province and show the resulting total. In internal reports, keep revenue, cost and margin on an exclusive basis; use the inclusive figure for cash reconciliation and customer payment checks.
| View | Best used for | What it answers |
|---|---|---|
| Tax-exclusive | Product pages, trade quotes and reporting | What is the furniture price before tax? |
| Tax-inclusive | Customer checkout and payment communication | What will the customer pay? |
| Both shown | Detailed quotes and order confirmations | How does the total reconcile to the tax? |
Worked example with sample numbers
This example is illustrative. It uses sample numbers for a furniture store selling in Canada. They are made up to show the method, they are not a benchmark, and your own figures will differ.
Formula: Tax inside an inclusive price = price - price / (1 + tax rate).
| Approach | Customer sees | Tax inside | You keep before costs |
|---|---|---|---|
| Tax included in the price | C$144.99 | C$16.68 | C$128.31 |
| Tax added at checkout | C$163.84 | C$18.85 | C$144.99 |
Run the same sum with your own numbers in the free calculator, or browse guides for sellers in Canada and more furniture guides.
General information only: tax, duty and import rules change and depend on your situation, so check with an accountant or the official source before acting.
Eligible Shopify stores can see these numbers for their own store through the Founding 10,000 offer.
How to read the worked example
Read the worked example in four passes. First, identify the selling price: this is the furniture amount before GST/HST. It is the figure to compare with the product’s cost and to use when assessing the price of the item itself. It is not the same as the amount deposited by the customer.
Next, locate the tax amount. This is the GST/HST calculated on the selling price at the applicable rate. Then find the customer total, which combines the selling price and the tax. This is the amount shown at checkout or on the invoice. A quick check is that the total should equal those two components, subject to any separate discounts, delivery charges or adjustments shown in the example.
Finally, read the margin impact using the example’s pre-tax selling price and product cost. The tax collected increases the customer’s payment, but it does not represent furniture revenue available to cover cost or profit. If the example shows a lower margin after a pricing or tax change, check whether the change affected the furniture price, the product cost or another selling expense. Keeping these lines distinct prevents a larger customer total from being mistaken for stronger profitability.
Separate tax from margin
GST/HST collected is a liability, not sales revenue. The customer pays it to you, but it belongs in your tax records rather than in the sales figure used to assess furniture demand or pricing. A tax-inclusive checkout total can make sales look higher than they are if the tax portion is not removed.
Start margin analysis with realized revenue from the furniture price, excluding GST/HST and excluding cancelled or returned orders. Subtract the product cost to calculate gross profit. Gross margin is gross profit divided by realized revenue. Product cost should reflect the cost model you use consistently, such as the supplier cost and other costs you assign directly to the item.
Selling costs answer a different question. Advertising, payment processing, delivery, installation, wages and overhead may not belong in product gross margin, but they affect the money left after a sale. Use gross margin to assess whether the item is priced above its product economics; use contribution after advertising to assess acquisition economics; and use net profit and net margin to judge the store overall. For a pricing decision, compare the pre-tax price with product cost and relevant selling costs, not the customer’s tax-inclusive total. A product pricing calculator can help separate these inputs.
| Figure | What it measures | When to act on it |
|---|---|---|
| Realized revenue | Furniture sales after excluding tax, returns and cancellations | Assess sales performance and price response |
| Gross margin | Revenue remaining after product cost | Review product pricing and sourcing |
| Contribution after advertising | Amount remaining after product cost and advertising | Assess acquisition economics |
| Net profit margin | Overall profitability after operating costs | Make store-level profitability decisions |
Records worth keeping
Organise records so an adviser can trace each reported sale from the customer order to the tax calculation, payment settlement and delivery outcome. Use one order or invoice reference across Shopify, your accounting system, payment processor and refund records. Keep source documents in a consistent folder or export structure.
For reconciliation, separate transaction evidence from the assumptions used to calculate product profitability. Record whether an order was completed, cancelled, returned or refunded, and retain the related dates.
- Orders and invoices: order number, customer, items, quantities, discounts, furniture price, GST/HST charged and total paid.
- Tax calculations: destination province, applicable rate, taxable and non-taxable components, adjustments and the calculation behind the tax amount.
- Shipping and delivery: delivery address or province, shipping charge, carrier or delivery partner, dispatch date, delivery date, failed delivery and returned-to-sender status.
- Refunds and returns: original order reference, returned items, refund date, refunded furniture amount, reversed GST/HST and any retained shipping charge.
- Product costs: SKU, supplier invoice, unit cost, freight or landed cost, current cost assumption and the date each cost became effective.
- Payment records: payment method, authorization or transaction ID, gross amount, processing fee, net settlement, payout date and currency.
- Reconciliation notes: missing documents, timing differences, manual adjustments and questions requiring adviser review.
Sources
- GST/HST provincial rates table (Canada Revenue Agency, checked 26 October 2026).
- Charge and collect the tax: which rate to charge (Canada Revenue Agency, checked 26 October 2026).
- When to register for and start charging the GST/HST (Canada Revenue Agency, checked 26 October 2026).
How this page was made: drafted with AI from a brief, then checked by automated rules for arithmetic, sources and duplication. The sample numbers were calculated, not reported.