GST and HST, explained

GST and HST are the same federal tax wearing different clothes: in HST provinces the federal and provincial portions are collected as one rate and split behind the scenes, while elsewhere the federal 5% travels alone or alongside a separate provincial tax with its own rules and its own base. To a customer this is one number on a receipt. To your ledger it is potentially two liabilities owed to two governments.

Books that record only the combined figure cannot produce a return without someone reverse-engineering the split later, which is where errors and audit findings come from.

Registration is what unlocks input tax credits, and they are usually the reason voluntary registration pays for itself: the GST/HST you paid on inventory, equipment, rent and services comes off what you remit. The remittance is collected minus credits, so a business that records purchases carelessly remits more than it owes.

That makes the purchase side of the books a tax document, not just a cost record — every bill entered accurately is money back.

Tax is decided per line, not per invoice. Each line's treatment comes from the product's tax category and the place of supply, so a GST-only item and a GST-plus-provincial item sit on the same sale without anyone thinking about it. Combined rates split into their federal and provincial halves in the ledger — one payable account per tax actually levied — which is what lets a return be filed from the books rather than rebuilt in a spreadsheet.

The Tax report then reads that same ledger for any period: taxable sales by rate with the base for each, zero-rated sales counted rather than dropped, credit notes netted, and a self-check against the sales ledger that says so out loud when the two disagree. Input tax credits accrue from purchase documents as they are entered.