“Can you do it for five hundred, all in?” That question hands you a reverse calculation. You know the total and you need the line item. To quote a tax-included price, divide the total by one plus the combined tax rate. The result is the pre-tax price to put on the invoice.
Work backwards from the total
In Ontario, at 13% HST:
Put $442.48 on the invoice. The HST on that is $57.52, and the total is $500.00.
Why rounding the price by eye costs you
If you quote $440 instead, the total comes to $497.20. The client pays $2.80 less than the amount you agreed on, and $2.48 of that is your revenue. On one job that is small. Across a hundred jobs a year it is $248.
Rounding up has the opposite problem. Quote $450 and the total is $508.50, which is not the number you agreed on.
The client agrees to the total. You earn the subtotal. Only the total needs to be round.
What $500 all in means in each province
| Province | Combined | Pre-tax | Tax |
|---|---|---|---|
| Alberta and the territories | 5% | $476.19 | $23.81 |
| Saskatchewan | 11% | $450.45 | $49.55 |
| British Columbia · Manitoba | 12% | $446.43 | $53.57 |
| Ontario | 13% | $442.48 | $57.52 |
| Nova Scotia | 14% | $438.60 | $61.40 |
| Quebec | 14.975% | $434.88 | $65.12 |
| NB · NL · PE | 15% | $434.78 | $65.22 |
The pre-tax amount varies by $41.41 across the country for the same $500 total. If you work in more than one province, work out the all-in price for each one. The rate that applies generally depends on where the work is delivered, not where you are based. See which tax applies to a sale for how that works.
Two details to get right
Calculate the tax on the rounded subtotal. The tax on an invoice is based on the subtotal you show, which is rounded to the cent. Round the subtotal, calculate the tax on it, and check that the total still matches your number. Some totals can’t be hit exactly. In Ontario, no pre-tax price comes to exactly $100.00: $88.49 gives $99.99 and $88.50 gives $100.01. In that case, pick the one that is closer to what you and the client agreed.
In two-tax provinces, split after dividing. In BC, divide $500 by 1.12 to get $446.43. Then apply 5% and 7% to that number: $22.32 GST and $31.25 PST. Dividing by each rate separately gives a different answer that does not add up to $500.
Whether you must charge tax depends on your registration status and what you are selling. Most businesses must register for GST/HST once their taxable sales pass $30,000 over four consecutive calendar quarters. Verify against canada.ca and your provincial revenue agency. This is not tax advice.
The reverse sales tax calculator does this in one step. Enter the all-in number, pick the province, and read the subtotal.