How to Calculate Goods & Services Tax

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The Goods and Services Tax (GST) is a national value-added tax that is assessed on most goods and services purchased in Canada. As of December 2010, the GST is assessed at a rate of 5 percent. The GST is separate from the Harmonized Sales Tax (HST) that is levied by the individual provinces in Canada at different rates. If a purchase is subject to both a GST and HST tax, the GST is assessed first and the HST is assessed on the purchase price plus the GST tax amount.

Determine the purchase price of the product or service. For example, assume a product costs $100.

Multiply the price of the product or service by 5 percent. Continuing the same example, $100 x .05 = $5. This figure represents the amount of the GST tax on the product or service.

Add the original purchase price of the product or service to the GST figure from Step 2 to determine the purchase price including the applicable GST tax. Continuing the same example, $100 + $5 = $105.

Tips & Warnings

  • In certain provinces a combines GST/HST tax is assessed. This means that a single combined tax rate is assessed that includes both taxes. For all other provinces, you need to calculate the purchase price including the assessed GST tax prior to calculating the HST tax and the total purchase price.

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