GST/HST Included in the Price: Formula to Back Out the Tax

My price includes GST/HST: how much is tax and how much is my sale?

The tax inside a price is the total times the tax fraction: the rate written as a whole number, over 100 plus that number. Take it off the total and the rest is the sale. At the GST rate of 5%, the tax is 5/105 of the total. The common mistake is multiplying the total by the rate, which treats the total as a price before tax and overstates the tax.

The tax is worked out on the price without the tax in it (section 165; section 154(2)(a)), so a tax-included total is the price plus the tax on it. The CRA calculator has a reverse option that takes a tax-included total and returns the tax and the amount before tax. It warns that results are estimates and can differ by a cent or two because of rounding.

This applies to sales made by a registrant (a business registered for GST/HST), or by a person who was required to register. A small supplier that is neither registered nor required to be registered collects no tax, so a price it sets has no tax inside (Memorandum 3-1).

The case is not simple when:

• a price was quoted before registering and the contract says nothing about tax;
• one total mixes taxable, zero-rated or exempt sales, or sales at different rates;
• provincial sales tax is also in the total;
• returns already filed used a tax-included total as sales, or applied the rate to the total.

If any of these applies, the tax and sales may need to be split period by period before you file or correct a return.

Gather the rate for each sale, the till, platform or invoice reports split by tax category, the contracts and quotes, the registration effective date, and the returns filed so far.

If your business is located in Québec, Revenu Québec generally administers the GST/HST and receives your returns on its own forms, so the CRA return lines below may not apply as written (RC4022).

Which rate do I use: GST or my province's HST?

Use the rate for the place where the supply is made. The rate for a taxable supply depends on the province or territory (CRA: which rate). The rates below come from the CRA rate table, with the tax fraction for each.

The fractions take out GST/HST only. If the same total also holds PST or QST, the GST fraction alone leaves that tax inside your sales; BC is covered below. Sales with a provincial point-of-sale rebate are the exception. Qualifying items include books in the HST provinces and children's clothing in Ontario, Nova Scotia and Prince Edward Island. When the rebate was credited at the till, the customer's total holds only the federal 5%, so use 5/105 for that group. The supplier may report the net amount on line 103, or the full HST on line 103 with the rebate on line 107 (RC4022).

For older sales, check the rate-change rules before choosing a fraction. Which rate applies can turn on when each amount was paid or became due, not when the work was done. Nova Scotia's April 1, 2025 cut is the recent case (CRA Notice 342).

HST is one rate. Where it applies, show the total HST rate and do not show the federal and provincial parts separately (CRA: which rate). Which province's rate applies to a customer in another province is in charging GST/HST, PST and QST by province.

Should I price with the tax included or add it on top?

Either is allowed; the CRA tells registrants to let customers know which (CRA: which rate). With tax included, the tax comes out of your price, so the same label keeps less. To keep a set amount per sale with tax included, multiply it by 100 plus the rate and divide by 100. The craft store example below shows both directions.

What must the invoice or receipt say when the tax is inside the price?

A registrant must tell the customer the tax is included, or show the amount of tax. Section 223 requires a registrant making a taxable supply, other than a zero-rated one, to indicate either the price and the tax in a way that clearly shows the tax, or that the amount payable includes the tax. The indication can be in the invoice, the receipt or a written agreement (section 223).

The CRA gives three ways to do it: state that the total includes GST/HST, show the price and the GST/HST as separate amounts, or show the GST/HST rate that applies. Receipts, invoices, contracts and posted signs can all carry the statement (RC4022; CRA: which rate).

Where you show the tax or the rate, show the total GST/HST payable, or the total of the rates (section 223(1.1)).

A registered customer who wants an input tax credit needs more detail on larger receipts. What a receipt must show at each amount is in receipt details for input tax credits.

I quoted a price before I registered: is the tax inside that price or added on top?

It depends on what the quote or contract says and when the supply is made. The Act does not say what a price silent on tax means.

The CRA says to start charging tax on the effective date of registration. Tax generally follows the payment, not the date of the work: consideration that becomes due, or is paid before it becomes due, while you are a small supplier who is not registered is left out of the tax, with exceptions such as sales of real property (section 166; section 168). If one calendar quarter passes the $30,000 small-supplier limit, the effective date is no later than the day of the supply that took you over, and that supply carries tax even before registration is in place. If you pass the limit over several quarters instead, you stop being a small supplier at the end of the month after the quarter in which you passed it, and tax starts with the first supply you make after that (CRA: when to register). A payment that was due or paid earlier, while you were neither registered nor required to be, has no tax to back out. If tax was charged or labelled on it, see charged GST/HST before registering.

For new prices, see the pricing section above. Either choice has a cost: keeping an old price and treating it as tax-included means each sale keeps less of the price, and adding tax on top raises what the customer pays.

On the silent case, P-118R says the CRA decides case by case, as a question of fact, whether to assess on a tax-extra or a tax-included basis. It says a tax-on-top assessment would be made where an invoice or agreement is silent and the supplier's records do not suggest tax was included. It also says either basis may follow where no disclosure was made, and that the CRA will not automatically assess tax-included because a supplier says the price included tax (P-118R). Both are CRA administrative positions, not law. They are older, and the CRA notes they may not reflect later legislative changes.

A supplier is required to collect the tax payable by the customer (section 221), and net tax counts tax that became collectible, not only tax actually collected (section 225). The wording and history of a quote that never had tax added are also covered in registered but did not charge GST/HST.

For services, tax generally follows the earlier of payment and the day the amount is deemed due, not the day the work was done. For GST/HST, due is the earliest of the day the supplier first issues an invoice or the date on it, the day it should have been issued but for undue delay, and the payment date a written agreement requires (section 152(1)). A later payment deadline printed on the invoice does not push that date back. Section 168 has extra timing rules for goods delivered, long construction or repair contracts, real property and deposits, so the facts of each supply matter. Check these dates against the registration effective date: they and the contract wording decide between inside and on top.

My daily sales totals include tax: how do I split them and record the tax?

Split each day's total by tax category and rate, back the tax out of each taxable group, and post the sale and the tax to separate accounts. A till or platform report that shows only one grand total has to be rebuilt by category before posting.

1. Take the day's totals by category: taxable at each rate (point-of-sale rebate sales apart), zero-rated, and exempt.
2. For each taxable group, add up the tax the receipts or till report already show. Where the report shows only totals, work it out with the fraction for its rate. The sale is the group total less that tax.
3. Post the sale to sales and the tax to the GST/HST payable account. The bank or cash debit is the full amount received.
4. Post zero-rated and exempt totals to sales in full, with no tax.
5. At period end, compare the tax posted with line 103, and the sales without tax (zero-rated and exempt sales included) with line 101.

Tax is rounded to the cent on each invoice or receipt, a fraction under half a cent dropped and half a cent or more counted as one cent (section 165.2). A reverse calculation on a day's total can therefore differ from the tax the receipts show, by more than a few cents when there are many small receipts. Reconcile the difference against the receipts; do not replace the receipt tax just to make the daily fraction balance. Keep the till's own report.

Keep each day's till or platform report with the books. The CRA names sales and purchase invoices and all other records related to the business and the GST/HST, usually for 6 years (CRA: records). The accounts and entries are in recording GST/HST in your books. For a platform that collected the tax, see when a marketplace collects GST/HST.

What if some items in the same total are taxable and others are zero-rated or exempt?

Back the tax out of the taxable part only. Zero-rated sales (such as basic groceries and exports) are taxed at a zero rate, and exempt sales (such as long-term residential rent) are outside GST/HST, so neither has tax inside its price (CRA: type of supply; section 165(3)). One fraction applied to a total that includes them overstates the tax.

The same goes for sales at different rates in one report, such as sales to customers in two provinces. Back the tax out of each rate group at its own fraction.

If the till gives only a grand total, rebuild the split from item sales, category sales or invoices before posting. From $100 up, a receipt that mixes supplies of different status must also indicate the status of each taxable supply that is not zero-rated, to support the buyer's credit (section 3; receipt details for input tax credits). Which of your items fall in which group is in exempt, zero-rated and out-of-scope sales.

Does the same method work for BC PST on a GST-included price?

Two things can happen in BC. The label may include GST with PST added at the till, or the total you hold may already contain both taxes. BC lets a seller price goods and services with GST included, and PST is calculated on the price before GST. At the general PST rate of 7%, BC tells sellers to charge PST on the GST-included price using a factor of 6.67%, which is 100 ÷ 105 × 7% (BC: small business guide to PST). The GST inside that price comes out with the GST fraction, as above.

When a single total holds both taxes, the CRA says to calculate the GST on the price without the PST, and BC calculates PST on the price before GST, with limited exceptions (CRA: which rate; BC guide). Neither source gives a combined formula; this follows from both. The two rates add: multiply the total by the sum of the two rates, divide by 100 plus that sum, then split the result between GST and PST in proportion to their rates.

That holds where both taxes are charged on the price before tax, which covers PST rates up to 12%. BC says GST applies to the PST charged where the PST rate is greater than 12% (vapour products and certain passenger vehicles), and this formula does not fit those. Some goods carry a PST rate other than the general rate, such as liquor, which has its own factor in the BC guide. Whether PST applies to your sale at all is in provincial sales tax and BC PST on services. Saskatchewan and Manitoba PST and Québec's QST have their own rules and are not covered here.

Which period and return line does the tax I backed out go on?

The tax goes on line 103 and the sales without tax go on line 101, both for the period in which the tax became payable. Tax on a supply is generally payable on the earlier of the day the price is paid and the day it becomes due (section 168), and net tax counts amounts that became collectible or were collected in the period (section 225). A till sale paid at the counter belongs to the day of the sale. Timing for invoices and deposits is in GST/HST on deposits and unpaid invoices.

The CRA's return instructions describe the two lines.

A tax-included total cannot go on line 101 as it stands, because that overstates sales by the tax. The Quick Method is different: its line 101 includes the tax, as the same instructions say. See the GST/HST Quick Method.

If line 101 and your profit and loss disagree, see a GST/HST return that does not match the books. Sales that cross a period end are in reporting period and fiscal year.

I have been remitting the wrong amount on tax-included sales: how do I fix it?

Work out the right tax for each period, compare it with lines 101 and 103 as filed, and correct the difference. The usual mistakes and their effect:

Over-remitted and under-remitted tax can both be corrected, in opposite directions. The CRA can generally reassess a return up to 4 years after the later of its due date and the day it was filed (section 298). A supplier that charged or collected too much tax from customers has 2 years to adjust, refund or credit the excess (section 232(1)).

A shortfall is the registrant's own debt. A sole proprietor owes it personally, and general partners are jointly liable for a partnership's (section 272.1(5)). A corporation's directors can be assessed once the Act's collection conditions are met, unless they took reasonable care, up to two years after they last cease to be directors (section 323). Older periods, many periods or a large gap raise the stakes. How to adjust a filed return, the time limits, interest and voluntary disclosure are in correcting a filed GST/HST return. If customers were charged the wrong rate, see charged the wrong GST/HST rate.

Example

These examples are illustrative. All amounts are in Canadian dollars.

A craft store's daily total

An Alberta craft store, which charges GST only, rings up C$2,100 in a day. Every item is taxable, every price includes GST, and the store uses the regular method. The tax is 2,100 × 5 ÷ 105 = C$100, and the sales are C$2,000. Multiplying 2,100 by 5% instead gives C$105, which overstates the tax by C$5. In the other direction, to keep C$2,000 with tax included, label the sale C$2,100 (2,000 × 105 ÷ 100); dividing 2,100 by 1.05 returns C$2,000.

The entry: debit bank C$2,100; credit sales C$2,000; credit GST/HST payable C$100.

A general store's mixed week

A Nova Scotia general store's weekly report shows C$12,000. Of that, C$11,400 is taxable and includes 14% HST, and C$600 is basic groceries such as milk and bread, which are zero-rated. The tax is 11,400 × 14 ÷ 114 = C$1,400, and taxable sales are C$10,000. Line 101 gets C$10,600 (C$10,000 plus C$600) and line 103 gets C$1,400. Applying the fraction to the whole C$12,000 gives C$1,473.68, which overstates the tax by C$73.68.

A consultant who quoted before registering

In April, an Ontario consultant quotes a fixed C$20,000 for a project and says nothing about tax. Her client is in Ontario and her HST registration is effective June 1. She does the work and invoices it in full in July. The contract sets no earlier payment date and nothing is paid before June 1.

• If the contract is read as price plus HST, the 13% HST is C$2,600. The client pays C$22,600, she remits C$2,600 and keeps C$20,000.
• If it is read as including HST, the tax is 20,000 × 13 ÷ 113 = C$2,300.88, and she keeps C$17,699.12.

If she files on the inside reading and the CRA assesses on the on-top basis, the tax is short by C$299.12. The wording of the contract and the facts around it decide which reading holds, so they need to be settled before filing. Had the same amount become due in May, while she was a small supplier who was not required to register, the tax would have been left out (section 166).

Different for you?

• Your till or platform totals have included tax for months, or past returns used them as sales: the split, the period of each sale and any correction may need the books rebuilt period by period. Start with bookkeeping help and see correcting a filed GST/HST return.
• You priced or quoted before registering, or your contracts do not mention tax: the wording and the effective date can decide who carries the tax. See charged GST/HST before registering and when to register for GST/HST, and get bookkeeping help to settle the split.
• You report on the Quick Method: the remittance is a rate on the tax-included total. See the GST/HST Quick Method.
• A platform or marketplace already collected the tax: see when a marketplace collects GST/HST.
• Customers are in other provinces: see charging GST/HST, PST and QST by province.
• You have several years of tax-included totals, mixed rates or returns already filed: this can be a rebuild by period. Get bookkeeping help, and see catching up on overdue books and rebuilding books from bank statements.