How this is worked out
Adding tax multiplies the price by the rate. Removing it divides:
pre-tax = total ÷ (1 + rate)
Take 13% off $113 and you get $98.31, not $100. Divide by 1.13 and you get $100. The tax is 13% of the pre-tax price but only 11.5% of the total, which is why subtracting never works.
The complication in Canada is not the arithmetic — it is that three different systems operate at once:
HST is a single harmonised tax administered federally, in Ontario, New Brunswick, Newfoundland and Labrador, Prince Edward Island and Nova Scotia. One rate, one return, one number.
GST plus PST is two separate taxes in British Columbia, Saskatchewan and Manitoba — a federal 5% and a provincial tax administered by the province, each with its own rules about what it applies to.
GST plus QST is Quebec's version. Since 2013 QST is charged on the pre-GST amount, so the two are additive rather than compounding — 5% and 9.975% give 14.975%, not 15.4988%.
Alberta and the three territories charge the 5% GST alone.
A worked example
- Pre-tax price
- $100.00
- Province
- Ontario
- HST at 13%
- $13.00
- Total to pay
- $113.00
- Wrong way back (subtract 13%)
- $98.31
- Right way back (divide by 1.13)
- $100.00
- Tax as a share of the total
- 11.50%
Three systems, one country
The rate you pay ranges from 5% in Alberta and the territories to 15% in New Brunswick, Newfoundland and Labrador, and Prince Edward Island. That is a ten point spread on the same purchase, and it is the largest internal variation of any comparable federation.
Nova Scotia is the recent change worth knowing: its HST fell from 15% to 14% on 1 April 2025, the province’s first rate change in fourteen years. The provincial component went from 10% to 9%; the federal 5% was untouched.
The distinction between HST and GST-plus-PST matters more to businesses than to consumers. Under HST there is one tax, one return and full input tax credits on both components. Under GST plus PST there are two returns, and PST is generally not recoverable on business inputs — so the same purchase costs a BC business more than an Ontario one even at a lower headline rate.
Quebec: additive, not compounding
Before 2013, QST was charged on the GST-inclusive price, so the two taxes compounded and the effective rate was higher than the sum of the parts. That changed: QST is now charged on the pre-GST amount, and 5% plus 9.975% is simply 14.975%.
A great deal of older material still describes the compounding version, and a calculator built on it overstates Quebec tax by about half a percentage point. This one does not compound.
Quebec administers both taxes itself through Revenu Québec rather than the CRA, which is why a Quebec business files differently from every other province.
What is zero-rated, and what is exempt
Basic groceries, prescription drugs, most medical devices and exports are zero-rated: no tax charged, and a business can still recover the GST on its costs. Most healthcare, education, childcare, and residential rent are exempt: no tax charged, and no recovery.
The line between "basic groceries" and everything else produces the usual absurdities. Six doughnuts are zero-rated as groceries; five are taxed as a prepared snack. Whole milk is zero-rated; a milk-based beverage may not be.
The provincial component adds its own exemptions where PST applies. British Columbia exempts most children’s clothing from PST but not from GST, so the same item carries 5% rather than 12%. This calculator applies one combined rate and does not know what you are buying.
The GST/HST credit, and registration
Low and modest income households receive a quarterly GST/HST credit, paid automatically based on the previous year’s return — which is one reason to file even with no income to report. It exists because a consumption tax takes a larger share of a small income than a large one.
For businesses, registration is required once revenues exceed $30,000 in a single calendar quarter or over four consecutive quarters. Below that you are a small supplier and may register voluntarily, which is usually worthwhile if your customers are registered businesses or if you have significant recoverable input tax.
The quick method exists for small businesses: remit a fixed percentage of tax-inclusive revenue instead of tracking input tax credits. It saves administration and sometimes money, depending on how much GST you would otherwise reclaim.
Assumptions and sources
- GST/HST rates by province
- Current rates including the Nova Scotia reduction to 14% effective 1 April 2025. checked 2026-08
- Provincial sales taxes
- BC PST 7%, Saskatchewan PST 6%, Manitoba RST 7%, Quebec QST 9.975% charged on the pre-GST amount. checked 2026-08
- Extraction formula
- pre-tax = total ÷ (1 + rate). Verified in tools/test/payroll.mjs against a round-trip on every provincial rate.
- Registration threshold
- $30,000 in a single calendar quarter or over four consecutive quarters.