Tom bought a pair of shoes for $120.99 and a dress silk tie for $59.99. GST is 5% PST is 8%. How much did he pay for the tax in total
Canadian, eh ???
I don't know much about Canadian tax policy, but there are - from what I understand - two ways in which the Provincial Sales Tax (PST) is calculated, depending on the province. One is on the original sales price, and the other is applied on the combined sales price and GST (ouch!!). I'll do it both ways.
Note that we spent ($120.99 + $59.99) = $189.98
The GST on this doesn't change, no matter the method....so we have
$189.98 x (.05) = $9.50
So, if we apply the PST strictly on the sales price, we get...$189.98 x (.08) = $15.20
And the combined amount we spend = $189.98 + $9.50 + $15.20 = $214.68
Now, if we calculate the PST on the combined sales price and the GST (= $199.48), we get
$199.48 x (.08) = $15.96
And, using this method, we spend $199.48 + $15.96 = $215.44
And that's it........
