How to Calculate Canadian Sales Tax

Save

Most Canadians pay both federal and provincial sales taxes on goods and services. The federal sales tax is 5 percent across the board; the provincial sales tax varies by province and the type of good you purchase. Many Canadian provinces add the federal and provincial taxes to create one rate called the Harmonized Sales Tax (HST).


Sometimes merchants include the tax in the selling price and sometimes they do not. There are two ways to calculate sales tax depending how a merchant prices goods. Knowing how to calculate Canadian sales tax is useful when comparing costs in different provinces.

Things You'll Need

  • Calculator

Computing Tax When It Is Not Included in the Price

  • Look up the HST for your province and the type of item you are purchasing. You can find current HST rates on the provincial governments' websites. If you are in a province that does not use HST, add 5 percent to the provincial rate to find the total tax rate. If there is no provincial tax, then the tax rate is simply 5 percent.

  • Express the tax rate as a decimal. For example, if the total tax rate is 12 percent, use the number 0.12.

  • Multiply the price of the item by the number you obtained in Step 2. This is the Canadian sales tax. For example, if an item costs $150 and the tax rate is 0.12, then the total sales tax is ($150)(0.12) = $18.

Computing Tax When It Is Included in the Price

  • Express the total tax rate as a decimal and add 1. For example, if the total tax is 12 percent, you would compute 0.12 + 1 = 1.12.

  • Divide the selling price of the item by the number you computed in Step 1. This is the base price of the item, the price before taxes. For example, if a store marks an item at $280, then the base price is $280/1.12 = $250.

  • Subtract the base price from the selling price to calculate the Canadian sales tax. For example, if the selling price is $280 and the base price is $250, then the tax is $30.

References

  • Photo Credit canada flag banner image by A74.FR Ben Fontaine from Fotolia.com
Promoted By Zergnet

Comments

You May Also Like

  • What Is Provincial Sales Tax in Ontario?

    The Provincial Sales Tax (PST) in Ontario is also known as the Retail Sales Tax (RST), Ontario Sales Tax (OST) and the...

  • How to Calculate Sales Tax

    Sales tax is a percentage of the purchase price, so you multiple the price by the tax. Sales taxes include state and...

  • How to Calculate Taxes in Quebec

    Tourists in Quebec are often caught off-guard by the province's two-layered sales tax system. With the proper math, however, determining the full...

  • How to Calculate Tax Deductions in Canada

    For the average Canadian, the tax system is easy enough to understand. The federal and provincial tax forms are well organized and...

  • A List of Canadian Taxes

    The Canada Revenue Agency (CRA) manages, imposes and collects taxes for the government of Canada. However, most jurisdictions in Canada have three...

  • German Import Duties

    Germany's import duties are the same as in other European Union (EU) states. German customs officers only inspect goods brought in from...

Related Searches

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!