Question 1

What is a reverse sales tax calculation?

Accepted Answer

A reverse sales tax calculation extracts the net pre-tax amount and the sales tax portion from a known gross total. For example, if you paid $113.00 in Ontario (HST 13%), the net consideration base is $100.00 and the HST Input Tax Credit is $13.00.

Question 2

What is an Input Tax Credit (ITC)?

Accepted Answer

An Input Tax Credit (ITC) allows GST/HST-registered businesses to recover the sales tax paid on eligible business expenses. The tax amount extracted by TaxBackwards.ca represents the ITC-eligible portion of your transaction.

Question 3

How is Quebec's QST calculated?

Accepted Answer

Since January 1, 2013, Quebec's QST (9.975%) is calculated directly on the net consideration base, not on top of GST. Both the federal GST (5%) and QST (9.975%) apply to the same pre-tax amount, for a combined effective rate of 14.975%.

Question 4

Which Canadian provinces use HST?

Accepted Answer

Ontario (13%), New Brunswick (15%), Nova Scotia (15%), Prince Edward Island (15%), and Newfoundland and Labrador (15%) use the Harmonized Sales Tax (HST), which combines the federal GST with the provincial component into a single rate administered by the CRA.