How to calculate reverse HST
In Canada, participating provinces blend federal Goods and Services Tax (GST) and Provincial Sales Tax (PST) into a single unified rate called Harmonized Sales Tax (HST). Businesses, freelancers, and corporations filing Canada Revenue Agency (CRA) GST/HST returns must perform reverse HST calculations to determine the exact pre-tax subtotal and claim input tax credits (ITCs) accurately.
13% HST Ontario reverse calculation
Ontario levies a 13% HST rate (5% federal GST + 8% provincial component). The formula to calculate pre-tax net subtotal and 13% HST paid is:
15% Atlantic Canada HST reverse calculation
Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland & Labrador charge a 15% HST rate (5% federal GST + 10% provincial component). The formula is:
Canadian Provinces Sales Tax Comparison Table
| Province | Tax Type | Combined Rate | Federal GST | Provincial Tax | Reverse Divisor |
|---|---|---|---|---|---|
| Ontario | HST | 13% | 5% | 8% | 1.13 |
| Nova Scotia | HST | 15% | 5% | 10% | 1.15 |
| New Brunswick | HST | 15% | 5% | 10% | 1.15 |
| Prince Edward Island | HST | 15% | 5% | 10% | 1.15 |
| Newfoundland & Labrador | HST | 15% | 5% | 10% | 1.15 |
| British Columbia | GST + PST | 12% | 5% | 7% | 1.12 |
| Quebec | GST + QST | 14.975% | 5% | 9.975% | 1.14975 |
| Alberta | GST Only | 5% | 5% | 0% | 1.05 |
CRA Input Tax Credits (ITCs) & bookkeeping rules
Under CRA regulations, GST/HST registrants can claim Input Tax Credits to recover tax paid on commercial operating expenses:
- Ensure vendor receipts include the seller’s 9-digit Business Number (BN) + RT GST account extension.
- When calculating ITCs for meals and entertainment expenses, apply the CRA 50% restriction rule after performing the reverse HST calculation.