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When Do You Have to Remit GST/HST on the Benefits and Allowances?

Did you know that GST/HST must be remitted on a taxable benefit unless the benefit is tax exempt or zero-rated, for example the benefit on low-interest loans? An example of a tax benefit that is not exempt includes the automobile standby charge and operating expense benefit. GST/HST must be remitted on shareholder benefits if they fall into Subsection 15(1) and are not tax zero-rated or tax exempt.

Automobile operating expense benefit: If your employee ordinarily worked in, or the location to which he or she ordinarily reported to, is located in a participating province (Prince Edward Island, New Brunswick, Newfoundland and Labrador, Nova Scotia, or Ontario), you are considered to have collected an amount equal to a percentage of the value of the benefit for GST/HST purposes, based on one of the following rates:

  • 10% for Prince Edward Island;
  • 11% for Nova Scotia;
  • 9% for New Brunswick, Newfoundland and Labrador;
  • 9% for Ontario, or 6.6% if the registrant is a large business for the purpose of the recapture of input tax credits for the provincial part of the HST.

If your employee ordinarily worked in, or he or she ordinarily reported to, a location in a non-participating province or territory (the rest of Canada), you are considered to have collected 3% of the value of the benefit for GST/HST purposes as calculated above.

Other Than Automobile Operating Expense Benefits: If the last establishment where your employee ordinarily worked, or to which he or she ordinarily reported in the year, is located in a participating province (Prince Edward Island, New Brunswick, Newfoundland and Labrador, Nova Scotia, or Ontario), you are considered to have collected the GST/HST as a percentage of the value of the benefit as follows:

  • 13/113 for Prince Edward Island;
  • 14/114 for Nova Scotia;
  • 12/112 for Ontario, and if the registrant is a large business, 4/104 (or 6/106) for motor vehicle benefits if the recapture rate was 100 % (or 75%) on the last day of the reporting period in which the business reported the recapture of input tax credits for the provincial part of the HST paid or payable on that motor vehicle.
  • 12/112 for all other participating provinces.

If the last establishment where your employee ordinarily worked or to which he or she ordinarily reported in the year is located in a non-participating province or territory (the rest of Canada), you are considered to have collected 4/104 of the value of the benefit for GST/HST purposes as calculated above.

Form T2200 – Declaration of Conditions of Employment: Canada Revenue Agency (CRA) expects employers to complete Form T2200 for employees that have reasonable grounds to make expense claims against employment income. If there is some doubt, CRA will provide interpretive assistance.

Contact us for further information on GST/HST remittances.