How much HST can a business collect and recover?

How much HST can a business collect and recover?

• A. Can collect 13% HST from customers and recover the amount of HST they paid on business expenses.
• B. Can collect 13% HST and cannot recover any paid HST.
• C. Can collect 15% HST and recover some paid HST.
• D. Can collect 5% HST and fully recover.

Answer: (A)

HST is a value-added tax system where a registered business collects tax on its sales and recovers the tax it pays on inputs. The net amount remitted to the government equals HST collected from customers minus the HST paid on eligible business purchases (input tax credits). In Ontario, the rate is 13%, so the business can collect 13% from customers and recover the HST paid on ordinary business expenses. If the ITCs exceed the HST collected in a period, a refund or credit forward can occur. Some purchases may be exempt or zero-rated, which affects eligibility for ITCs.

HST is a value-added tax system where a registered business collects tax on its sales and recovers the tax it pays on inputs. The net amount remitted to the government equals HST collected from customers minus the HST paid on eligible business purchases (input tax credits). In Ontario, the rate is 13%, so the business can collect 13% from customers and recover the HST paid on ordinary business expenses. If the ITCs exceed the HST collected in a period, a refund or credit forward can occur. Some purchases may be exempt or zero-rated, which affects eligibility for ITCs.