1. HST

2. HST Harmonized Sales Tax
Combination of GST and PST – New effective July
Complex!!! Lots of rules

3. HST Roles Roles of Seller Roles of Consumer Charges Collects
Remits (send in collected taxes) to the Government
Roles of Consumer
Pays

4. New Accounts for GST/HST
Both new accounts are liabilities
GST/HST Payable
Specific Accounts Payable to the Gov’t
GST/HST Recoverable
Considered a contra-liability
(A liability account)
Some of the HST paid by a business is eligible to be refunded.
For our purposes, we will assume all HST from expenses is recoverable.

5. New Liability Accounts
HST Payable
HST Recoverable
Liability
“Bad thing” for a business
works like all liabilities
Use standard approach:
Increase liability CR
Decrease Liability DR
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 DR
Decrease contra-liability CR

6. HST Remittance
The HST we have collected gets remitted to the Government The HST we spend buying products/services from other businesses gets refunded to us Two cheques?!! The difference is either refunded or remitted at the end of the year. Larger companies will pay this in installments throughout the year based on predicted amounts

7. $ Hair Cut $10 $ Hair Products $1,000 $ HST Tax $1.30 $ HST Tax $1.30
HST Paid out to other businesses
is refunded by the government…
GST/HST recoverable
HST Collected from customers
Is Owed to the Government…
GST/HST Payable
$128.7
$130 – 1.30 = $128.7

8. Transaction #1- Recording a sale
Provide a hair cut for $10 cash.
Cash
Sales
HST Payable

9. Transaction #2 – Recording a purchase
Purchased $1000 worth of Hair products (shampoo, conditioner etc.)
Hair Supplies
HST Recoverable
Cash

10. Transaction #3 – Remitting HST
Collected $1.30, paid $130
Difference is $ – So the government pays us back!
Cash
HST Payable
HST Recoverable 130

11. On the Balance Sheet