Using "Apply the tax to shipping" option when you need to setup a separate tax that only applies to the shipping cost

- Open your shop in ShopFactory

- Click Central dropdown button -> Taxes

- Untick "Apply tax on products to Shipping and Handling Charges" checkbox

- Click  the + button to Add a new Shipping Tax.

Note: If you select "Other region" to the option "Where does the tax apply?" - in the next window you must choose the region where the tax applies.

- Then Click the Next button.

- At the Final Tax setup dialog, you can untick "Prices include this tax" if tax will be added on top of the shipping cost

- You can also untick "Allow customers with Sales Tax exemptions to remove sales tax from charges" if you don't want the tax exemption to be available in your shop.

 - Click the Finish button.

You are redirected back to the main Tax dialog box:

- Click the Ok button to save your changes.

- You have now setup a shipping tax that applies at checkout to the tax regions you selected during setup.  

In the Checkout it will display as tax applying to Shipping only.