Public Service Bodies Not Registered for the GST and the QST
If you want to recover only the direct cost of a property or service, you may elect to make the sale of the property or service exempt provided the total price is within the normal range and does not exceed the direct cost. However, if the total price exceeds the direct cost, the sale is taxable. See the summary table below.
|Do not charge the taxes||Total price ≤ direct cost||Exempt sale|
|Total price > direct cost||Taxable sale|
An organization not registered for the GST and the QST buys sweaters bearing the organization's logo for $15.66 apiece, plus $0.78 GST and $1.56 QST.
The partial QST rebate that the organization can claim depends on the rebate rate for the type of organization. For example, a qualifying non-profit organization (NPO) can claim a 50% QST rebate.
If the organization is a qualifying NPO, the direct cost is thus $17.22 ($15.66 + $0.78 + $1.56 − $0.78), that is, the purchase price plus GST and QST minus the partial QST rebate to which the organization is entitled.
If the sweaters are sold for $17.22 apiece, the sale is exempt because the total price is equal to the direct cost.