Chemistry 12
(Actually for Mi'kmaq Studies 10)
By: The Squad
Squad Leader: Andrews
What is Sales Tax?
• In Canada, the government imposes sales tax on certain items. Businesses, by
law, are the agents of the government for the collection of sales taxes!
• A customer pays sales tax to a company and the company sends the money
to the government.
• In most Provinces, retailers collect both provincial sales taxes and federal
goods and service tax or the harmonized sales tax.
PST
PST stands for Provincial Sales Tax.
All provinces except Alberta ( and the three territories) enforce PST. It is charged on the price of
goods (tangible stuff) sold to consumers. A few services such as telephone services are charged
PST. Each province determines the rates of sales tax and these are subject to change.
• Exempt Items
 Food
 Drugs
 School Supplies & Children’s Clothes
GST
GST stands for Goods and Services Tax
• GST is a tax charged on most sales of services or merchandise. It
must be added to the selling price by manufacturers, wholesalers,
and retailers of merchandise (service provider).
HST
HST stands for Harmonized Sales Tax.
• Nova Scotia, New Brunswick, Ontario, Newfoundland and Labrador, and Prince
Edward Island have the harmonized sales taxes. The HST
Nova Scotia
New Brunswick
P.E.I
Ontario
NFLD
15%
13%
14%
13%
13%
Current HST, GST and PST rates
Canada's Province
Rate type (HST, GST, PST) Provincial rate
Canada rate
Total
Alberta
GST
0%
5%
5%
British Columbia (BC)
GST+PST
7%
5%
12%
Manitoba
New-Brunswick
Newfoundland and
Labrador
GST+PST
HST
8%
8%
5%
5%
13%
13%
HST
8%
5%
13%
Northwest Territories
GST
0%
5%
5%
Nova Scotia
Nunavut
Ontario
HST
GST
HST
10%
0%
8%
5%
5%
5%
15%
5%
13%
Prince Edward Island (PEI) HST
9%
5%
14%
Québec
Saskatchewan
Yukon
9.975%
5%
0%
5%
5%
5%
14.975%
10%
5%
GST + QST
GST + PST
GST
How to Calculate
• When you sell a service to a customer you must charge them tax. (By law) In NovaScotia we add 15% to the final total of the purchase. For example:
• Mighty-Mechanics charge $100 for an oil change. Then add the 15% tax.
• As a business when you purchase items like supplies you must also pay tax on the
supplies you purchase. That means that the amount that will be deducted from your
cash account will be more than the value of the supplies on the asset side of your
balance sheet.
• We will now learn how to record transactions so the balance sheet will balance.
How to Record
• Record taxes on sales to HST Payable, GST Payable, or PST Payable.
Depending on which tax is applied.
• Record taxes on purchases to HST Refundable, GST Refundable, or PST
Refundable. Depending on which tax is applied.
Example #1
• On Oct 31 Monster Inc. sells $1000 worth of scares with $150 HST.
Cash
Oct. 31 1000
Revenue
Oct. 31 850
HST Payable
Oct. 31 150
Example #2
• On Oct 11 The Krusty Krab buys $4000 worth of claws with $600 worth of
HST.
Cash
Oct. 11 4600
Inventory
Oct. 11 4000
HST Receivable
Oct. 11 600
What is a Sales Tax Payable Account?
• A payable account for example, PST Payable, PST Payable is used when you
collect PST from a customer, and it now becomes a payable to the
government.
• Ex. You provide a service to a customer, and they pay you sales tax in
addition to their purchase.
• The tax they pay is not your money to keep, you owe it to the government
and must keep it recorded in a separate account.
What is a Sales Tax Receivable Account?
• A Receivable account is when you buy something for your business such as
supplies or snowplowing and you are owed the amount of tax you paid on
those purchases back from the government.
• Ex. C&A Auto buys a new muffler for $700 with a HST of $105 and you
will get the $105 back from the government.
Journalizing
• Jun. 23. Boudreau Inc. sells $3000 worth of haircuts including HST. The
HST amount calculates to $450. Your boss asks you to record the General
Journal entry. Receipt No. 1
General Journal
Date
Account Title
2015
Jun
23Cash
Revenue
HST Payable
Sold Haircuts for Cash. Receipt No. 1
Doc.
No.
Post.
Ref.
Page 1
General
Debit
Credit
3000.00
2550
450
Journalizing #2
• Jun. 24. Mi’kmaq Inc. bought $2000 worth of feathers. With $300 worth of
HST. Receipt No. 420
Date
2015
Jun
Account Title
24Supplies
HST Receivable
Cash
Bought feather. Receipt No. 420
Doc.
No.
Post.
Ref.
General
Debit
Credit
2000.00
300.00
2300
Questions
•
•
•
•
Pg. 331 #20- 24
Pg. 332 # 19,20
Define: Sales Tax, PST, GST, HST
What sales tax applies in our Province?
Now it’s your turn!
• Journalize these entries.
• In N.S. on Oct. 4 XYZ company bought $800 worth of cleaning supplies.
• In Quebec on Apr. 20 Darts Company sold $800 worth of Fire Fighting.
More Chem 12 Questions!!
• 1) What type of accounts are PST Payable, GST Payable and GST
Refundable?
• 2) A service is provided for $200 cash. GST is 5% and PST is 10%.
Calculate the base price.
• 3)