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Ask The Expert

How do you calculate GST in an invoice or gas bill?

By Julia Germain |

Mandy asked:

How do you calculate the Gst when it is included in a price.

For example, Total Purchases was $39.07 GST is $2.22. What is the formula for getting the answer?

Julia Germain answered:

By the example you gave, it is most probably a gasoline receipt. For gasoline - the GST is a piggybacked tax. The final tax on top of other taxes.

The formula for calculating the GST on gasoline using your example :$ 39.07 divide by 1.06 = $ 36.86 (net cost)$ 36.86 multiply by .06 = 2.21 (I guess the gas company rounded up to $2.22)

Since your example is a non-harmonized tax province, I won't get into the HST.

Other calculations would be a little different if there is Provincial Sales Tax involved.

For example in Ontario the PST is 8%.

Thus if you bought a chair for $ 100 - the GST would be $ 6.00 but the total outlay of money for the chair including all taxes would be $ 114.00. For accounting purposes - the cost of chair is $ 108 and the GST for business purposes reduces the amount that has to be remitted to CRA.

If a receipt states - GST Included and there is no specific amount for the GST stated - then if there is a GST # included - there is 6% GST built into the total outlay of money. But you must be aware of what has PST built inalso.

Examples would be:

  • Taxi's & Limos - Receipts always say GST included with the GST # stated -thus the formula to calculate the GST is the same as for Gasoline.
  • Parking - Receipts will quote GST #'s but not always state the GST amountbut parking is normally subject to PST.

    Thus your formula could be :

    • $ 15.00 (outlay of cash) divided by 1.14 = $ 13.16 (net cost)
    • $ 13.16 multiply by .08 = $ 1.05 which is the PST portion built in
    • $ 13.16 multiply by .06 = $ 0.79 which is the GST portion built in.

Beware of receipts that show GST amounts and/or state GST included that do not state the GST #.

In order to collect GST - the GST number must be supplied. Please refer to previous Ask The Expert response "Should GST be paid".

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