Calculate the GST/HST to remit on employee benefits

How to manually calculate the amount of GST/HST to remit on employee benefits.

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• Steps
• References

Steps

1. Determine if the benefit is taxable

   Before you calculate, you need to know if the benefit is taxable.

   Learn more: Determine if a benefit is taxable.

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   •  If the benefit is not taxable, do not continue to next step.

     You do not need to calculate the GST/HST.

   • Continue to next step if your employee has not reached the maximum.

2. Determine if the GST/HST is not considered collected in special situations

   Before you calculate, you need to know if the GST/HST is not considered collected in special situations.

   1. GST/HST not considered collected

      Situations where you are not considered to have collected the GST/HST on a taxable benefit provided to your employee:

      • The property or service that gives rise to the taxable benefit is GST/HST exempt or zero-rated
      • The taxable benefit results from an allowance included in the income of the employee under paragraph 6(1)(b) of the Income Tax Act
      • You are restricted from claiming an input tax credit (ITC) in the situations described in ITC restrictions  for the GST/HST paid or payable on the property and services that give rise to the taxable benefit
      • The property or service that gives rise to the taxable benefit is supplied outside Canada

      Example

      You, as an employer who is a GST/HST registrant, would like to reward an employee for outstanding performance, and you have agreed to pay for hotel accommodations and three meals a day, for one week, in London, England. An amount will be included in the income of the employee as a taxable benefit. However, you will not be considered to have collected tax in respect of the benefit provided to the employee, since the supplies were made outside of Canada.

      If one of the above conditions are met, you do not need to calculate the GST/HST.

   2. GST/HST not considered collected, automobile or motor vehicles

      Under the Excise Tax Act, you are not considered to have collected the GST/HST if you make an election by filling out Form GST30, Election for Passenger Vehicles or Aircraft to be Deemed to be Used Exclusively in Non-Commercial Activities (or state in writing the information required on the form) and one of the following conditions apply:

      • You are an individual or a partnership and the passenger vehicle or the aircraft that you have bought is used less than 90% in the commercial activities of the business
      • You are not an individual, a partnership, or a financial institution, and the passenger vehicle or the aircraft that you bought is used 50% or less in the commercial activities of the business
      • You are a financial institution and choose to treat the passenger vehicle or the aircraft you lease or have bought as being used only in non-commercial activities of the business
      • You are not a financial institution and you lease the passenger vehicle or the aircraft which you use 50% or more in non-commercial activities of the business, and you choose to treat it as being used 90% or more in such non-commercial activities

      You do not have to send the Form GST30 to the CRA. You must keep this form in your records in case you are asked for it.

       If one of the conditions are met, you do not need to do GST/HST calculations.

      •  

        •  If the GST/HST is not considered collected because it is in a special situation, do not continue to next step.

          You do not need to calculate the GST/HST.

        • Continue to next step if the GST/HST is considered collected.

3. Determine which GST/HST rate to apply

   The GST/HST rates to use depend on:

   • Location (the last establishment of the registrant at which the employee ordinarily worked, or which the employee generally reported in the tax year; or, where the shareholder resides at the end of the tax year)
   • If the benefit is an automobile operating expense benefit or some other type of benefit
   • If you are a large business on December 31, 2022, for the purpose of the recapture of input tax credits for the provincial part of the HST

   GST/HST rates on benefits (do not use these rates for automobile operating expenses)

    

   GST/HST rates on benefits, not including automobile operating expenses

   Location	GST/HST considered to be collected (a percentage of the value of the benefit)
   Non-participating provinces	4/104
   Nova Scotia, including the offshore area	14/114
   New Brunswick	14/114
   Newfoundland and Labrador	14/114
   Ontario, small business	12/112
   Ontario, large business	Continue to Large businesses located in Ontario
   Prince Edward Island, small business	14/114
   Prince Edward Island, large business	Continue to Large businesses located in Prince Edward Island

   Large businesses located in Ontario or Prince Edward Island

   If you are considered a large business, the GST/HST calculations may be different. If you cannot claim an input tax credit for the GST/HST you may not have to remit the GST/HST on that benefit.

   When the location is in Ontario or Prince Edward Island, the percentage may be different if the registrant is a large business. In general, a person is considered a large business if the person is a registrant and:

   • Person has a threshold amount for the recapture of input tax credits (RITCs) of more than $10 million in their last fiscal year that ended before the recapture period
   • Person is one of the following financial institutions, or a person that is related to one of the following financial institutions: a bank; a credit union; a corporation that is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as a trustee; an insurer or any other person whose principal business is providing insurance under insurance policies; a segregated fund of an insurer, an investment plan, or the person is the Canada Deposit Insurance Corporation

   Learn more: GST/HST Technical Information Bulletin B-104, Harmonized Sales Tax – Temporary Recapture of Input Tax Credits in Ontario and British Columbia.

   If you are, or were, a large business, and the benefits relate to a motor vehicle that was subject to the RITC for the provincial part of the HST paid or payable on that vehicle you are considered to have collected, for 2022, the GST/HST as a percentage of the value of the benefits as follows:

   • 4/104, if the recapture rate was 100% on the last day of the last reporting period in which you reported the RITC for the provincial part of the HST paid or payable on that motor vehicle
   • 6/106, if the recapture rate was 75% on the last day of the last reporting period in which you reported the RITC for the provincial part of the HST paid or payable in Ontario on that motor vehicle
   • 6.5/106.5, if the recapture rate was 75% on the last day of the last reporting period in which you reported the RITC for the provincial part of the HST paid or payable in Prince Edward Island on that motor vehicle
   • 8/108, if the recapture rate was 50% on the last day of the last reporting period in which you reported the RITC for the provincial part of the HST paid or payable in Ontario on that motor vehicle
   • 9/109, if the recapture rate was 50% on the last day of the last reporting period in which you reported the RITC for the provincial part of the HST paid or payable in Prince Edward Island on that motor vehicle
   • 10/110, if the recapture rate was 25% on the last day of the last reporting period in which you reported the RITC for the provincial part of the HST paid or payable in Ontario on that motor vehicle
   • 11.5/111.5, if the recapture rate was 25% on the last day of the last reporting period in which you reported the RITC for the provincial part of the HST paid or payable in Prince Edward Island on that motor vehicle
   • 12/112, if the recapture rate was 0% on the last day of the last reporting period in which you reported the RITC for the provincial part of the HST paid or payable in Ontario on that motor vehicle
   • 14/114, if the recapture rate was 0% on the last day of the last reporting period in which you reported the RITC for the provincial part of the HST paid or payable in Prince Edward Island on that motor vehicle

   GST/HST rates on automobile operating expenses benefits

    

   GST/HST rates on automobile operating expenses

   Location	GST/HST considered to be collected
   Non-participating provinces	3%
   Nova Scotia, including offshore area	11%
   New Brunswick	11%
   Newfoundland and Labrador	11%
   Ontario, small business	9%
   Ontario, large business before tax year 2019	Refer to GST/HST Memorandum 9.2, Automobile Benefits
   Prince Edward Island, small business	11%
   Prince Edward Island, large business before tax year 2019	Refer to GST/HST Memorandum 9.2, Automobile Benefits

   GST/HST rates on reimbursements made by employees or their relatives, do not use these rates for automobile standby charge or operating expenses)

    

   GST/HST rates on reimbursements other than standby charge or operating expense of an automobile

   Location	GST/HST considered to be collected (a percentage of the reimbursement)
   Non-participating provinces	5/105
   Nova Scotia, including offshore area	15/115
   New Brunswick	15/115
   Newfoundland and Labrador	15/115
   Ontario	13/113
   Prince Edward Island	15/115

4. Calculate the GST/HST to remit

   You need to calculate based on the following type of benefit:

   Calculate the GST/HST on automobile standby charge and operating expenses

   Use the following to calculate the GST/HST on the automobile benefit:

   Standby charge benefit

   • Amount of the standby charge benefit
   • plus Amount of the standby charge reimbursement
   • plus Amount of the payment to third party for personal use
   • equals Total amount of the standby charge
   • multiply by GST/HST tax fraction 
   • equals Amount of GST/HST on the standby charge benefit

   Operating expense benefit

   • Amount of the operating expense benefit
   • plus Amount of the operating expense reimbursement
   • equals Total amount of the operating expense benefit
   • multiply by GST/HST prescribed %  
   • equals Amount of GST/HST on the operating expense benefit

   Total amount to remit

   • Amount of GST/HST on the standby charge benefit
   • plus Amount of GST/HST on the operating expense benefit
   • equals Amount of GST/HST to remit on the automobile benefit on the GST/HST return using line 103 (or line 105 if filed electronically)

   Calculation example

   In 2022, Matthew was required to use the automobile in connection with his employment in Ontario. The cost of the automobile was $50,000 when it was bought, including options, accessories, and the HST. He was not selling or leasing automobiles. Matthew's employer made the automobile available to him throughout the year (365 days). In verifying his travel, his employer found that he drove 10,000 km for personal use out of a total of 12,000 km. Matthew reimbursed his employer $500 for the standby charge, $300 for operating expenses 45 days before the end of the year and $200 directly to a third party in the year. Of that $200 reimbursed to a third party, only $166.67 related to the personal use of the automobile (10,000 km / 12,000 km x $200). Matthew did not provide a written notice to use the alternative method of calculating the operating expenses benefit.

   Standby charge benefit

   • $12,000 is the amount of the standby charge benefit
   • plus $500 is the amount of the standby charge reimbursement
   • plus $166.67 is the amount of the payment to third party for personal use
   • equals $12,666.67 is the total amount of the standby charge
   • multiply by 12/112 is the HST tax fraction in Ontario
   • equals $1,357.14 is the amount of HST on the standby charge benefit

   Operating expense benefit

   • $2,900 is the amount of the operating expense benefit
   • plus $300 is the amount of the operating expense reimbursement
   • equals $3,200 is the total amount of the operating expense benefit
   • multiply by 9% is the prescribed % in Ontario
   • equals $288 is the amount of HST on the operating expense benefit

   Total amount to remit

   • $1,357.14 is the amount HST on the standby charge benefit
   • plus $288 is the HST on the operating expense benefit
   • equals $1,645.14 is the amount of HST to remit on the automobile benefit on the GST/HST return using line 103 (or line 105 if filed electronically)

   Matthew's employer needs to remit $1,645.14 for the HST as he is considered a small business.

   Learn more Automobile – Standby charges and operating expense benefits.

   Calculate the GST/HST on reimbursements made by employees (or their relatives)

   Use the following to calculate the GST/HST on benefits other than automobile:

   • Total value of the benefit that is taxable
   • minus Any amounts your employee reimburses you
   • equals Value of the benefit to be included on the T4 slip
   • multiply by GST/HST tax fraction 
   • equals Amount of GST/HST to remit on the GST/HST return using line 103 (or line 105 if filed electronically)

   Example – Calculations

   An employee works a lot from home or on the road. The employee already owns the cell phone and uses it to perform their employment duties. They also use the phone 60% of the time for personal use. The employer reimburses the employee for their monthly phone service plan. The employee's service plan is $80 per month and includes extra features no required for their employment duties (cost for the service plan is not considered reasonable in the circumstances).

   The amount reimbursed by the employer for the personal use portion of the cell phone plan is a taxable benefit because the cost of the plan is not considered reasonable and the amount reimbursed includes personal use. The taxable benefit is calculated as follows:

   • $576 (($80 x 12 months = $960) x 60%) is the amount reimbursed for the personal use of the cell phone service plan
   • minus $0 because the employee did not reimburse the employer
   • equals $576 is the value of the benefit to be included on the T4 slip
   • multiply by 12/112 is the HST calculation in Ontario
   • equals $61.71 is the amount of HST to remit on the GST/HST return using line 103 (or line 105 if filed electronically)

5. When to remit and file GST/HST returns

   GST/HST calculated on benefits must be remitted as follows:

   • Employee benefits

     Last day in February of the year after the year you provided the benefit (this is also the deadline for distributing T4 slips to your employees)

   • Shareholder benefits

     Last day in June of the year after the year you provided the benefit

   • Reimbursements made by employees (or their relatives) on benefits

     Same time the GST/HST return is due for the reporting period that includes the date of the reimbursement

   You have to report the GST/HST for those taxable benefits on your GST/HST return using line 105 (or line 103 if you are filing by paper).

   Example

   You are a GST/HST registrant and have a monthly reporting period.

   You calculated the taxable benefits, including any GST/HST and PST, for each pay period during 2022 the benefits were provided to your employees.

   You are considered to have collected the GST/HST on those taxable benefits on February 28, 2023. You have to report the GST/HST for those taxable benefits on your GST/HST return for the reporting period that includes the last day of February 2023, using line 105 (or line 103 if you are filing by paper).

References

Legislation