Amount before sales tax x (GST rate/100) = GST amount
Amount without sales tax x (QST rate/100) = QST amount
Amount without sales tax + GST amount + QST amount = Total amount with sales taxes
GST rates have been the same since 2008 at 5%.
QST rates have been the same since 2013, at 9.975%.
You can also reverse the calculation and get the total amount without the taxes. The simple formula for the same is:
Amount with sales taxes-GST(5%)-QST= Amount without the taxes.
All Canadian business owners must be already aware of how to calculate and thereby charge the customers when it comes to sales tax. The federal and provincial government of Canada imposes the tax on goods and services that essentially falls in three categories:
The above-mentioned types of taxes have their own specifics and thus, are applied on different consumers. To understand them better, let’s take an in depth look at them.
The Federal government of Canada imposes the goods and services tax and as the name suggests, it applies on nearly all the goods and services within Canada. It means that almost all goods and services in Canada will have a 5% charge on them. The only supplies that’ll be devoid of the tax will be the goods and services, which are either zero-rated or exempted from the same.
The name speaks for this tax as well as the provincial government regulates the tax on the goods and services. This type of tax is imposed both on taxable and zero-rated items. The tax is further managed by the Canadian Revenue Agency.
A few provinces that include Quebec, are supposed to pay not just the PST but also 5%GST.
To come to a consensus and narrow down to one tax altogether, some provinces opt for Harmonized Sales Tax (HST), that is a hybrid of federal tax and provincial tax. So according to the province, you will have to pay the HST, which again is managed by the Canadian Revenue Agency. The range of the percentage is from 13-15 %.
While the GST is uniform within the country, it is different than PST that varies from province to province. The difference lies in the type and rate of the tax paid. On one hand, some of the provinces like Manitoba and Saskatchewan have an independent outlook in terms of collecting the tax and work separately from the federal government, on the other hand, provinces like Quebec and Prince Edward Island imposed the GST along with the PST, before 2013. The federal government collects the HST, which is amalgamation the two types of taxes, further the provincial share of the tax is redistributed to the respective province.
To begin with, if you are a small company y owner, you need to have a GST/HST account with the CRA, in order to collect taxes. Your tax returns will depend on the assigned reporting period by the CRA. Now comes the calculation part. A pretty easy way to calculate the tax in 2020 is the Canadian tax calculator that makes the calculation hassle-free and accurate. The CRA hosts one of the most up-to-date calculators that is solely used to calculate the GST/PST/QST/HST.
The calculator helps in calculating the tax based on the data provided by the CRA and Revenue Quebec for the year 2012 and 2013 and then accordingly apply it on other goods that fall in other provinces.