HST
HST

Harmonized Sales Tax
Combination of GST and PST – New
effective July 1 2010

Complex!!! Lots of rules

HST Roles

Roles of Seller




Charges
Collects
Remits
Roles of Consumer

Pays
New Accounts for GST/HST
Both new accounts are liabilities
1.
GST/HST Payable

2.
Like Accounts Payable for the Gov’t
GST/HST Recoverable


Considered a contra-liability –(A
liability account)
Accumulates the HST that the
company is entitled to receive back
from the government
New Liability Accounts
GST Payable
GST Recoverable
Liability
 “Bad thing” for a business
 works like all liabilities
Use standard approach:
 Increase liability
Contra–liability
 “Good thing” for a business
(can think of it as having
value like an asset)
 It is a Liability account
 Works differently
 Holds an exceptional
balance for a liability
 Special approach:
 Increase contra-liability


CR
Decrease Liability

DR


DR
Decrease contra-liability

CR
$ Hair Products $1,000
$$HST
HST Tax$130
Tax$130
HST Paid out to other businesses
is refunded by the government…
GST/HST recoverable
$130 – 1.30 = $128.7
$ Hair Cut $10
$ HST Tax $1.30
HST Collected from customers
Is Owed to the Government…
GST/HST Payable
$128.7
Transaction #1- Recording a sale

Provide a hair cut for $10 cash.
Cash
11.30
Sales
HST Payable
10
1.30
Transaction #2 – Recording a purchase

Purchased $1000 worth of Hair
products (shampoo, conditioner etc.)
Hair Supplies
HST Recoverable
Cash
1000
130
1130
Transaction #3 – Remitting HST


Collected $1.30, paid $130
Difference is $128.70 – So the
government pays us back!
Cash
128.70
HST Payable
1.30
HST Recoverable
130