What your child should know about taxes

 

Has your child noticed that purchases at checkout are usually priced a little higher than on the tag? Tax calculation is an important notion in his financial education.

 

What your child should know about taxes depending on their age

 

Ages 6–9:

• Taxes are sometimes added when they buy things
• Tax money is collected by governments to pay for services for citizens

Ages 10–11:

• The applicable goods and services tax rates in their province and in Canada

What are taxes?

 

An amount of money that's added to the price of certain goods and services. When you buy something for $5, you'll be charged a bit more than $5. The store owner will keep the $5 and give the government the additional amount.

 

Some items are taxed, and other items aren't taxed, like basic groceries. For example, there's no tax on fresh fruit and vegetables (like apples or carrots). However, there's tax on processed foods like cookies or soft drinks.

 

To calculate the final price of a good or service that includes tax, you'll need to take the listed price and multiply it by the current tax rates. This will give you the tax amount. Then, add it to the base price.

 

Current tax rates
 

In Quebec : 5% (GST) + 9.975% (QST) = 14.975%
In Ontario : 13% (HST)

Source: Canada Revenue Agency.
(Page consulted on November 2, 2022)

 

Example of a purchase in Quebec

 

Price shown on the tag of a figurine: $10.94

 

Calculate: $10.94 X 0.14975 = $1.64

                $1.64 + $10.94 = $12.58

 

Final price: $12.58

 

*Answers are rounded to 2 decimal places.

 

How do you teach your kids about taxes?

 

With toddlers, the best way is to use games to teach them and start the discussion. You can play these games with them at the store or supermarket.

 

For older kids, having them experience a real-life situation will help give them a better understanding. Take a receipt and look at what's on it with your child. Have them take note of the original price and the calculations that follow for adding the taxes. At stores, pick up some items and have them guess the final price. Then, have them check using our tax calculator.