The GST/HST and the QST are not applied to a deposit. The GST/HST and the QST are calculated on the deposit only if the supplier applies the deposit as partial payment of the sale price of a good or service.
If the customer forfeits the deposit by not purchasing the item or service, the GST/HST and the QST are considered to be included in the deposit. To determine the GST to be collected and remitted on the forfeited amount, multiply the amount of the deposit by 5/105. To determine the QST to be collected and remitted, multiply the total amount of the deposit by 9.975/109.975. Customers who are input tax credit (ITC) and an input tax refund (ITR) for the taxes deemed to have been paid on the forfeited deposit if they have the required information.
Calculation of the HST
To determine the HST to be remitted on a forfeited deposit in a participating province, multiply the amount of the deposit by the fraction shown in the table below.
|Newfoundland and Labrador||15/1152|
|Prince Edward Island||15/1153|
- Fraction to be used for forfeited deposits effective July 1, 2016. The fraction to be used for forfeited deposits before that date is 13/113.
- See note 1.
- Fraction to be used for forfeited deposits effective October 1, 2016. The fraction to be used for forfeited deposits before that date is 14/114.
Customers who are registrants can claim an ITC and an ITR for the taxes deemed to have been paid on the forfeited deposit if they have supporting documents.
A customer pays a deposit of $50 to reserve a television set for purchase, but later decides not to buy the item. The deposit is therefore forfeited. We consider that you have collected GST and QST equal to 5/105 and 9.975/109.975, respectively, of the forfeited deposit. As a result, you must remit $2.38 in GST ($50 × 5/105) and $4.54 in QST ($50 × 9.975/109.975). If the customer is a registrant, an ITC of $2.38 and an ITR of $4.54 can be claimed in most cases.
The above rules do not apply to instalment payments. For the rule that applies, see When to Collect the GST and QST.