Guide
How to back out HST from tax-included prices
Registered Etsy sellers in Canada price tax-included, so every sale has GST/HST hidden inside it. Here's how to get it back out, to the cent.
The formula
tax = amount × rate ÷ (100 + rate)
The CRA calls this the tax fraction: 5/105 for GST, 13/113 for 13% HST, 14/114 for 14% and 15/115 for 15%. Its own example is “$100 × 5/105 = $4.76 GST”. Subtract the tax from the amount and you have the price before tax.
Dividing by 1.13 and subtracting gets you to the same place. What doesn't work is taking 13% of the total. That charges tax on the tax: 13% of $113.00 is $14.69, when the HST inside it is $13.00.
Worked examples on a $50.00 sale
| Rate | Where | Tax fraction | Tax | Before tax |
|---|---|---|---|---|
| 5% GST | AB, BC, MB, NT, NU, QC, SK, YT | 5/105 | $2.38 | $47.62 |
| 13% HST | ON | 13/113 | $5.75 | $44.25 |
| 14% HST | NS | 14/114 | $6.14 | $43.86 |
| 15% HST | NB, NL, PE | 15/115 | $6.52 | $43.48 |
Use the rate for where the order ships. A buyer in Halifax pays Nova Scotia's rate even if your shop is in Calgary.
Rounding: per order, not per month
The CRA rounds tax to the nearest cent, with half a cent rounding up. Each Etsy order is a separate sale, so round each one.
It adds up. Three $1.00 orders to Ontario each contain $0.12 of HST, so $0.36 in total. Backing the tax out of the $3.00 total in one go gives $0.35. A cent here, a few cents there, and your return stops matching your orders. The CRA's own reverse calculator warns that results can differ “by a cent or two” for the same reason.
Tell buyers the price includes tax
The CRA requires you to tell buyers how GST/HST applies. You can show the tax separately, show the rate, or state that the total includes GST/HST. With tax-included Etsy prices, a clear statement that prices include GST/HST is the one that fits.
Sales you don't back tax out of
- Orders shipped outside Canada. They're zero-rated, so there's no tax inside the price.
- Orders where Etsy added GST/HST at checkout, for example before your number was on your Etsy account. Etsy sends that tax to the CRA itself.
Common questions
How do I calculate HST from a total that already includes it?
Multiply the total by the rate, then divide by 100 plus the rate. For Ontario's 13% HST that's total × 13 ÷ 113. On a $113.00 sale, the HST is $13.00 and the amount before tax is $100.00.
Why is 13% of my total the wrong answer?
Because 13% of a tax-included total takes tax on the tax. 13% of $113.00 is $14.69, which overstates the HST by $1.69. The tax fraction 13/113 gives the right $13.00.
Which rate do I use for an Etsy order?
The rate for the province or territory the order ships to, not where your shop is. Orders mailed or couriered outside Canada are zero-rated, so there's no GST/HST to back out.
Should I back out tax per order or from my monthly total?
Per order. Each Etsy order is its own sale, and the CRA rounds tax to the nearest cent per sale. Working from a monthly total can come out a few cents different, and the gap grows with the number of orders.
More guides
- How Etsy handles GST/HST for registered sellersWhat changes on Etsy once you add your GST/HST number, and the double-tax mistake to avoid.
- Claiming GST/HST on Etsy feesEtsy charges registered sellers GST/HST on every fee. Here's how to claim it back.
- GST/HST filing deadlines for annual filersWhen annual filers pay and file, instalments, and the e-filing rule that catches people out.
Have your Etsy exports?
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