Ontario Sales Tax Calculator 2018

How Ontario Sales Tax Works

In 2018, Ontario implemented the Harmonized Sales Tax (HST) system, which replaced the previous Goods and Services Tax (GST) and Provincial Sales Tax (PST). The HST combines both taxes into a single rate, simplifying sales tax calculations for businesses and consumers.

The HST is applied to the selling price of taxable goods and services. The total amount paid by the customer includes the original price plus the HST. Businesses must collect and remit the HST to the government on behalf of the province.

Tax Rates in 2018

In 2018, Ontario had the following sales tax rates:

• HST (Harmonized Sales Tax): 13%
• PST (Provincial Sales Tax): 8%
• GST (Goods and Services Tax): 5%

The HST rate of 13% was the combined rate of the previous PST (8%) and GST (5%). This change was part of Ontario's move toward a simplified sales tax system.

How to Calculate Sales Tax

Calculating sales tax in Ontario involves applying the HST rate to the price of goods or services. Here's a step-by-step guide:

1. Determine the price of the item before tax.
2. Multiply the price by the HST rate (13%).
3. Add the calculated tax to the original price to get the total amount.

For example, if an item costs $100 before tax:

Common Sales Tax Scenarios

Here are some common scenarios where sales tax applies in Ontario:

Purchasing Goods

When you buy physical items like clothing, electronics, or furniture, the sales tax is typically included in the final price. The HST is calculated on the pre-tax price.

Services

Many services, such as haircuts, plumbing work, and consulting services, are subject to HST. The tax is added to the service fee.

Digital Products

Digital products like e-books, software, and streaming services are generally subject to HST in Ontario.

Exempt Items

Some items are exempt from sales tax, such as basic groceries, prescription medications, and medical devices. These items are not subject to HST.