GST/HST and QST

GST/HST and QST Consequences

Rules of Application

  • Certain taxable benefits are subject to GST/HST.
  • An employer who makes a taxable service or property available to an employee is treated as having made a supply and is considered to have collected GST/HST.
  • These rules do not apply to:
    • cash remuneration,
    • taxable benefit of an exempt or zero-rated supply,
    • taxable benefit of a non-registrant employer,
  • QST is generally harmonized with GST but there are some exceptions.
  • QST is applicable to businesses that have a permanent establishment in Quebec.

GST/HST Remittance

Rules of Application

  • The GST or HST is deemed collected on the last day of February of the following year.
  • Remittable with return that includes the month of February.
  • Remittance is not required if:
    • Employer is not a registrant;
    • Registrant employer was not entitled to claim an ITC for the property as it was acquired exclusively (>90%) for non commercial activities;
    • Individual or partnership is employer and automobile was not used exclusively (³90%) in commercial activities;
    • Employer (other than individual, partnership or financial institution) acquired an automobile which was not used primarily >50% in commercial activities.

Computation

  • For automobile operating benefit, the prescribed amounts are:
    • For GST 3% 
    • For HST 9% 

  • For all other benefits, the prescribed amounts are:
    • For GST 4/104
    •  HST 12/112 

QST Remittance

Rules of Application

  • Generally harmonized with GST.
  • Small and medium-sized businesses are required to remit the QST benefit.
  • Large businesses are not required to remit the QST benefit on restricted expenses (i.e. automobiles), but are required to remit on non restricted expenses (i.e. taxable tuition benefit).
  • Definition of small and medium-sized businesses:
    • Annual revenues in Canada (including exports) on an associated basis do not exceed $10 million in the immediate preceding fiscal year.
  • Definition of large businesses:
    • One that is not a small and medium-size business.
    • All banks, trust companies, credit unions, insurers and investment plans.

Computation

  • Prescribed amount is 4.7% for automobile operating benefit.
  • In all other cases, prescribed amount is 7.5/107.5.

GST/HST and QST for Expense Reimbursements

GST/HST

  • Registered employers can claim GST/HST paid on expense reimbursements in the course of their commercial activities.
  • The actual amount of GST/HST paid can be claimed; or
  • To facilitate the process, an administrative factor may be used:
    • For GST 4/104
    • For HST 12/112
  • The administrative factor applies only to expense reimbursements.
  • Expenses must be incurred in Canada.
  • Can be used by category of expenses; however must be used consistently for all employees.
  • 50% limit still applies on meal and entertainment expenses.

QST

  • Registered employers can claim QST paid on expense reimbursements in the course of their commercial activities.
  • The actual amount of QST paid can be claimed; or
  • To facilitate the process, an administrative factor may be used for:
    • large businesses 4.1% only on expenses incurred in Quebec,
    • small and medium-sized businesses 7/107 only on expenses incurred in Quebec.
  • If administrative factor is used, it must be used for all expense reimbursements.