1. What is Reverse GST and PST Calculation?

The Reverse GST and PST calculation determines the original pre-tax amount when you know the total amount including taxes. This is particularly useful for businesses in British Columbia that need to separate the tax components from a total amount.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Total Amount — The amount including both GST and PST
• 0.05 — GST rate (5%)
• 0.07 — PST rate (7%) for British Columbia

Explanation: The formula works by dividing the total amount by the sum of 1 plus both tax rates to isolate the original pre-tax amount.

3. Importance of Reverse Tax Calculation

Details: This calculation is essential for accounting purposes, expense tracking, and financial reporting where you need to separate the actual cost of goods/services from the taxes paid.

4. Using the Calculator

Tips: Simply enter the total amount including taxes in Canadian dollars. The calculator will automatically compute the pre-tax amount, GST (5%), and PST (7%) components.

5. Frequently Asked Questions (FAQ)

Q1: Why do I need to calculate reverse taxes?
A: It helps in proper accounting, expense allocation, and understanding the actual cost of items before taxes.

Q2: Are these rates specific to BC?
A: Yes, this calculator uses BC's PST rate of 7%. Other provinces may have different rates.

Q3: What if I only have GST (no PST)?
A: For GST-only calculations, use the formula: Pre-tax = Total Amount / 1.05

Q4: Can I use this for HST provinces?
A: No, HST provinces have a single harmonized tax rate. You would need a different calculation.

Q5: How accurate is this calculation?
A: It's mathematically precise for the given tax rates. However, always consult with an accountant for official financial reporting.