Reimbursements

GST/HST memorandum 9-4
June 2026

This version replaces the one dated June 2012. This memorandum has been updated to reflect the current GST/HST rates. It also cancels and replaces GST/HST Policy Statement P-184, Credit Card Expenses and the Registrant’s Use of Factors for Claiming Input Tax Credits.

Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Tax Act (ETA). The information in this publication does not replace the law found in the ETA and its regulations. Although correct at the time of issue, this publication may not have been updated to reflect subsequent legislative changes.

If this information does not completely address your particular situation, you may wish to refer to the ETA or relevant regulation, or call GST/HST Rulings at 1‑800‑959‑8287 for additional information. If you require certainty with respect to any particular GST/HST matter, you may request a ruling. GST/HST Memorandum 1-4, Requesting a GST/HST Ruling or Interpretation, explains how to obtain a ruling or an interpretation.

If you are located in Quebec and wish to request a ruling related to the GST/HST, please call Revenu Québec at 1‑800‑567‑4692. You may also visit the Revenu Québec website at revenuquebec.ca to obtain general information.

For listed financial institutions that are selected listed financial institutions (SLFIs) for GST/HST or Quebec sales tax (QST) purposes or both, whether or not they are located in Quebec, the CRA administers the GST/HST and the QST. If you wish to make a technical GST/HST or QST enquiry related to SLFIs, please call 1‑855‑666‑5166.

GST/HST rates

Reference in this publication is made to supplies that are subject to the GST or the HST. The GST/HST rates are those that were in effect at the time of publishing. For the list of all applicable GST/HST rates (current and historic), go to GST/HST calculator (and rates).

If you are uncertain as to whether a supply is made in a participating province, refer to GST/HST Memorandum 3-3-2, Place of Supply in a Province – Overview.

Table of Contents

• General
• Meaning of significant terms
• Reimbursements
  • Amounts that are not reimbursements
    • Allowances
    • Taxable benefits
• Purpose of section 175 and eligibility requirements
• Calculation of the GST/HST deemed paid
• Input tax credit and rebate eligibility
  • Input tax credit eligibility
  • Rebate eligibility
    • Rebates of the GST/HST
    • Public service bodies' rebate
  • Amount of input tax credit or rebate that may be claimed
  • Consistent use of method of calculation
  • Factors for input tax credit or rebate on reimbursements
• Credit card expenses
  • Meals and entertainment restriction
• Documentary requirements for input tax credits
  • Exemption from general requirements
• Documentary requirements for rebates

General

1. Certain persons may be entitled to claim an input tax credit (ITC) or a public service bodies' rebate in respect of reimbursements paid to their employees, members of a partnership (partners), or volunteers of a charity or public institution. Where the conditions of section 175 are met, a person may be eligible to claim the ITC or rebate amount that they would have been able to claim had they incurred the expense directly.

2. For information on claiming ITCs, refer to GST/HST Memorandum 8-1, General Eligibility Rules.

3. For information on claiming public service bodies' rebates, refer to Guide RC4034, GST/HST Public Service Bodies' Rebate.

Meaning of significant terms

4. Charity means a registered charity or registered Canadian amateur athletic association for income tax purposes but does not include a public institution. A charity can issue official donation receipts for income tax purposes.

5. Employee includes an officer.

6. Employer, in relation to an officer, means the person from whom the officer receives remuneration.

7. Office has the meaning assigned by subsection 248(1) of the Income Tax Act (ITA), but does not include any of the following:

• the position of trustee in bankruptcy
• the position of receiver (including the position of a receiver within the meaning assigned by subsection 266(1))
• the position of trustee of a trust or personal representative of a deceased individual where the person that acts in the capacity is entitled to an amount for doing so that is included in computing, for the purposes of the ITA, the person's income or, where the person is an individual, the person's income from a business

8. Officer means a person who holds an office.

9. Participating province means a province that has harmonized its provincial sales tax (PST) with the GST to implement the HST. Participating provinces include New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, but do not include the Nova Scotia offshore area or the Newfoundland offshore area except to the extent that offshore activities, as defined in subsection 123(1), are carried on in that area.

10. Public institution means a registered charity for income tax purposes that is also a school authority, a public college, a university, a hospital authority, or a local authority determined by the Minister of National Revenue to be a municipality.

Reimbursements

11. Where it has been determined for income tax purposes that an amount is a reimbursement, the amount is also a reimbursement for GST/HST purposes.

12. For the purposes of section 175, a reimbursement is a payment made by one person to repay another person for amounts spent. An amount constitutes a reimbursement where the amount is fully accounted for by the person receiving the payment (that is, evidenced by supporting vouchers or records).

13. The Canada Revenue Agency (CRA) considers all of the following to be reimbursements:

• a direct payment made on account by an employer, partnership, charity, or public institution as long as the liability for payment does not rest entirely with this person (for example, where an employer and an employee are jointly and severally liable to pay an amount on a corporate credit card)
• a cash advance obtained (either before or after the acquisitions are made with the cash advance) by the employee, partner, or volunteer with the company credit card
• an accountable advance, which is an amount given for expenses to be incurred and to be accounted for by the production of vouchers and the return of any amount not so spent

Amounts that are not reimbursements

Allowances

14. An allowance is any periodic or lump sum amount that a person receives from another person without having to account for its use. An amount constitutes an allowance for purposes of sections 174, 236, 253, and 259 where the amount meets all of the following criteria:

• The amount paid is a predetermined amount
• The amount paid is for a certain purpose
• The amount paid is at the complete disposition of the person receiving the payment
• The person receiving the payment does not have to repay the amount, does not have to account for its use, and does not have to demonstrate that the amount was actually spent

15. Consequently, an allowance is not a reimbursement. For detailed information on allowances, refer to GST/HST Memorandum 9-3, Allowances.

Taxable benefits

16. A reimbursement that results in a taxable benefit to the individual under the ITA is, in reality, remuneration or income of the individual and is not a reimbursement for the purposes of section 175. As income, the payment is not subject to the GST/HST and therefore is not eligible for purposes of determining an ITC or rebate entitlement under the ETA.

Purpose of section 175 and eligibility requirements

17. Section 175 enables a person that is an employer, partnership, charity, or public institution to claim an ITC or public service bodies' rebate in respect of an amount reimbursed to employees, partners, or volunteers for the acquisition, importation, or bringing into a participating province of property or services for consumption or use in relation to the activities of the person.

18. When the conditions of section 175 are met, the person is deemed to have received a supply of the property or service and to have paid the GST/HST in respect of the supply acquired by its employee, partner, or volunteer, at the time the reimbursement is paid.

19. The provisions of section 175 apply to a person that is an employer, partnership, charity, or public institution that reimburses an amount to any of the following:

• an employee of the person
• where the person is a partnership, to a member of the partnership
• where the person is a charity or public institution, to a volunteer who gives services to the charity or public institution

20. An individual who gives services as a volunteer to a charity or public institution is not considered an employee of the charity or public institution. However, in some instances, an employee of a charity or public institution may, outside of their employment contract, give services to that charity or public institution as a volunteer. The facts of the case will determine whether an individual is providing services as a volunteer or performing duties in the course of their office or employment with a charity or public institution.

21. The person receiving the reimbursement must be an employee, a partner, or a volunteer at the time the property or service is acquired, imported, or brought into a participating province. If not, the provisions of section 175 do not apply to any reimbursement.

22. However, if a person is an employee, a partner, or a volunteer at the time the property or service is acquired, imported, or brought into a participating province, it is not necessary that the person still be an employee, partner, or volunteer at the time of the reimbursement.

23. If the employee, partner, or volunteer was acting as an agent for the employer, partnership, charity, or public institution at the time they acquired, imported, or brought into a participating province property or services, section 175 does not apply to the reimbursement. Instead, as the employer, partnership, charity, or public institution is considered to be the recipient of the supply, the usual rules for determining whether that person is entitled to claim ITCs or rebates apply. For more information on agents, refer to GST/HST Info Sheet GI-012, Agents.

24. Generally, under section 267, if an individual dies, the GST/HST provisions continue to apply to the individual's estate as if the estate were the individual and the individual had not died. Under section 267.1, the trustee of a trust includes the representative of a deceased individual and a trust includes the estate of a deceased individual. Provided that the individual acquired, imported, or brought into a participating province property or services at the time that they were an employee, partner, or volunteer, any reimbursement to the estate of the deceased individual could be subject to the rules in section 175. However, if the estate acquires, imports, or brings into a participating province property or services after the death of the individual, the provisions of section 175 do not apply.

25. Where a company reimburses the employees of another company for expenses that the employees of the other company incurred as a result of an arrangement between the two companies, section 175 does not apply.

26. Under section 175, the property or service acquired, imported, or brought into a participating province by an employee, partner, or volunteer must be for consumption or use in relation to the activities of the employer, partnership, charity, or public institution.

27. It is a question of fact whether the consumption or use of the property or service is in relation to the activities of the employer, partnership, charity, or public institution. However, there must be a direct connection between the consumption or use of the property or service and the activities engaged in by the person. For more information on the terms consumption and use, refer to GST/HST Memorandum 8-1.

28. Sometimes an employee, partner, or volunteer acquires, imports, or brings into a participating province multiple supplies of property or services, some of which are for consumption or use in relation to the activities of the employer, partnership, charity, or public institution and some of which are not. The supplies that are not for consumption or use in relation to the activities of the employer, partnership, charity, or public institution do not fall within the preamble to subsection 175(1). Consequently, the provisions of section 175 do not apply to those particular supplies.

29. Generally, membership dues in a professional or work-related association are invoiced to the individual who is obligated to pay the amount as a member of the association. Where an employer reimburses all or a portion of the membership dues of its employees, the provisions of section 175 apply, provided that the membership dues are in relation to the activities of the employer. Furthermore, any direct payment made by the employer to the association on behalf of an employee in respect of the employee's membership dues constitutes a reimbursement of the employee's expense. Similar rules apply with respect to membership dues paid on behalf of partners and volunteers of a charity or public institution.

30. Section 175 further requires that, the employee, partner, or volunteer must also have paid the GST/HST payable on the acquisition, importation, or bringing into a participating province of the property or services.

Calculation of the GST/HST deemed paid

31. Where the conditions of section 175 are met, an employer, partnership, charity, or public institution that pays an amount as a reimbursement to an employee, partner, or volunteer is deemed to have received a supply of the property or service that was acquired, imported, or brought into a participating province and to have paid the GST/HST in respect of this supply.

32. Any consumption or use of the property or service by the employee, partner, or volunteer in relation to the activities of the employer, partnership, charity, or public institution is deemed to be consumption or use by the employer, partnership, charity, or public institution, as the case may be, and not by the employee, partner, or volunteer.

33. Where the conditions of section 175 are met, the employer, partnership, charity, or public institution is deemed to have paid, at the time the reimbursement is paid, the GST/HST in respect of the supply equal to the amount determined by a formula, referred to as the exact calculation method throughout the remainder of this memorandum, and calculated as follows:

A × B

where:

34. If a partnership reimburses a partner who is not an individual after the partner has filed a return with the CRA and claimed an ITC in respect of the same expense, the rules in subsection 175(1) do not apply. Therefore, the partnership is not entitled to claim an ITC for the tax deemed paid even though it has reimbursed the partner.

Input tax credit and rebate eligibility

Input tax credit eligibility

35. Where an employer, partnership, charity, or public institution that is a GST/HST registrant reimburses an employee, partner, or volunteer and the reimbursement meets the conditions of section 175, the registrant may be eligible to claim an ITC under subsection 169(1), where all the other conditions for claiming an ITC are met. The ITC for the GST/HST deemed paid is limited to the amount the registrant could have claimed if they had incurred the expense directly, based on the extent to which the deemed use or consumption is in the course of the registrant’s commercial activities.

36. Charities are required to use the net tax calculation for charities. Consequently, they cannot claim ITCs for the GST/HST paid or payable on most of their purchases. However, if a charity meets certain conditions, it may elect not to use the net tax calculation for charities. For more information, refer to GST/HST Info Sheet GI-066, How a Charity Completes Its GST/HST Return, or Guide RC4082, GST/HST Information for Charities.

Rebate eligibility

Rebates of the GST/HST

37. Eligible persons paying a reimbursement may be entitled to a rebate of the GST/HST deemed paid in respect of the property or service.

38. For example, an Indian band or a band-empowered entity may claim a general rebate using reason code 8 on Form GST189, General Application for GST/HST Rebates, when they pay a reimbursement to their employees or officials for eligible travel expenses. For more information, refer to GST/HST Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians.

39. An Indigenous government that has entered into an agreement with the Government of Canada that pays a reimbursement to an employee may be entitled to a self-government refund of the GST and the federal part of the HST deemed paid on property or services for use in self-government activities. For more information, refer to Guide RC4034, under the heading "Self-government refund".

40. A provincial government that has agreed to use the pay and rebate model that pays a reimbursement to an employee may be entitled to a rebate of the GST/HST deemed paid on the property or service. For more information, go to GST/HST information for governments and diplomats under the heading "Supplies made to provincial and territorial governments".

Public service bodies' rebate

41. Certain public service bodies can claim a public service bodies' rebate to recover a percentage of the GST/HST paid or payable on eligible purchases and expenses that it cannot recover in any other way. A public service body may not be entitled to an ITC for the GST/HST deemed paid in respect of a property or service in some cases (for example, if the person is not a GST/HST registrant, the property or service is not consumed or used in the course of its commercial activities, the person is limited in the ITCs that it can claim because of the net tax calculation for charities or the special quick method of accounting for public service bodies).

42. Where a charity, qualifying non-profit organization, or selected public service body that reimburses an employee is not entitled to an ITC, the person may be entitled to a public service bodies' rebate, under section 259, of the GST/HST deemed paid in respect of the property or service.

43. Where a charity or public institution that reimburses a volunteer is not entitled to an ITC, the charity or public institution may be entitled to a public service bodies' rebate, under section 259, of the GST/HST deemed paid in respect of the property or service.

44. A public service bodies' rebate is not available if the GST/HST deemed paid was in respect of a non-eligible purchase or expense. For more information, refer to Guide RC4034.

Amount of input tax credit or rebate that may be claimed

45. The amount of an ITC or rebate that can be claimed in respect of a reimbursement may be based on the exact calculation method (refer to the formula in paragraph 33) or calculated using a factor of the GST/HST deemed paid (referred to as the factor method). To use the factor method, 90% or more of the supplies for which the reimbursement is paid must have been subject to the related tax rate.

Consistent use of method of calculation

46. Registrants must use the method of calculation that they select consistently within each category of reimbursed amounts (for example, airfare, hotel accommodation, food, beverages, and entertainment) throughout the fiscal year. This means, for example, that if a registrant chooses to calculate the GST/HST paid in respect of airfare expenses for one employee using the factor method, the registrant must use the same method for airfare expenses reimbursed to all other employees during the fiscal year.

Factors for input tax credit or rebate on reimbursements

47. The following tables provide the factors that an employer, partnership, charity, or public institution may use to calculate the ITC or rebate using the factor method on reimbursements paid to employees, partners, and volunteers. The factor rates are lower than the GST/HST rates in recognition of the fact that the total expenses may include tips, PST, and other amounts that are not subject to the GST/HST.

Credit card expenses

48. The CRA allows a person that is an employer, a partnership, a charity, or a public institution to use the factor method to calculate ITCs or rebates in respect of the GST/HST deemed paid by the person on purchases made by the person's employees, partners, or volunteers using credit cards. The use of factors is meant to simplify the administrative burden because credit card receipts often only show a single amount that is the total that includes gratuities and PST. Using the factor method is an option, however, some persons may prefer to use the exact calculation method.

49. Factors may be used to calculate ITCs and rebates on expenses charged to company credit cards, provided all of the following conditions are met:

• In the case of an ITC, the card member (that is, the employee, partner, or volunteer) must have acquired the property or service for consumption or use in relation to the person's (that is, the employer's, partnership's, charity's, or public institution's) commercial activities
• In the case of public service bodies' rebates, the card member must have acquired an eligible property or service (refer to Guide RC4034 for more information)
• There must be one or more written agreements between the person, the card member, and the credit card issuer stating that the card member is solely or jointly and severally liable with the person for the payment of all charges made on the company credit card issued to the card member
• All or substantially all (90% or more) of the purchases of property or services recorded on the credit card statement must be taxable supplies (other than zero-rated supplies) acquired in Canada by the card member
• The documentary evidence used to support the ITC or rebate claim must satisfy the following criteria:
  • Where a credit card receipt is issued together with another supporting document, the person must obtain both the receipt and document before filing the return in which they claim the ITC or before filing the rebate application
  • Where no other supporting document is issued with a credit card receipt (for example, gasoline purchased at a service station), the credit card receipt is sufficient documentary evidence to claim an ITC or rebate

50. The monthly credit card statement does not constitute sufficient documentary evidence to claim an ITC or rebate. Whether the person uses the factor method or the exact calculation method (refer to paragraph 33) to calculate the ITC or rebate, the credit card statement must be supported by another document (for example, a credit card receipt or an invoice) to entitle the person to claim an ITC or rebate.

51. The CRA considers a direct payment made on account by the person to the card issuer to be a reimbursement as long as the liability for payment of the credit card statement does not rest entirely with the person.

52. If only the person, and not the card member, is liable to pay the company credit card account, it is the CRA's view that the person paid the expense and not the card member. Therefore, the card member is not being reimbursed by the person for any amount. 

Meals and entertainment restriction

53. If a reimbursement is paid in respect of the GST/HST incurred on food, beverages, and entertainment, the recapture rule under section 236 may apply to limit a registrant's ITC entitlement. However, the recapture rule does not apply to charities or public institutions. For more information on the ITC limitations in respect of food, beverages, and entertainment, refer to GST/HST Memorandum 8-2, General Restrictions and Limitations.

Documentary requirements for input tax credits

54. Registrants that use the exact calculation method to determine their ITC eligibility for reimbursements (refer to paragraph 33) are subject to the general documentary and information requirements as prescribed under subsection 169(4). For information on documentary requirements in respect of ITCs, refer to GST/HST Memorandum 8-4, Documentary Requirements for Claiming Input Tax Credits. For information on maintaining books and records, refer to GST/HST Memorandum 15-1, General Requirements for Books and Records, and GST/HST Memorandum 15-2, Computerized Records.

Exemption from general requirements

55. Persons that use the factor method for reimbursements are exempt from the general documentary and information requirements for claiming ITCs if they maintain books and records that contain all of the following information:

• the name and GST/HST registration number of the employer, partnership, charity, or public institution that paid the reimbursement
• the name of the employee, partner, or volunteer who received the reimbursement
• the total amount of the reimbursement paid to each employee, partner, or volunteer
• the total GST/HST deemed to have been paid by the employer, partnership, charity, or public institution in respect of the reimbursement
• the reporting period in which the reimbursement was paid
• the nature of the reimbursement (that is, a description of the reimbursement, its purpose, and tax status)

Documentary requirements for rebates

56. Persons that claim rebates for the GST/HST deemed paid on reimbursements are required, under subsection 286(1) and (1.2), to maintain adequate books and records, unless otherwise authorized by the Minister, in Canada in English or French to enable verification of the amount of the rebate. For information on maintaining books and records, refer to GST/HST Memorandum 15-1, and GST/HST Memorandum 15-2.

Further information