ITC restrictions

Remember, if you cannot claim an ITC for the GST/HST paid or payable for property or services that give rise to a taxable benefit due to the restrictions described in one of the following paragraphs, you are not considered to have collected the GST/HST and, as a result, you do not have to remit the GST/HST on that benefit.

Club memberships

You may pay or reimburse fees for membership to any club whose main purpose is to provide dining, recreational, or sporting facilities. In such cases, you cannot claim an ITC for the GST/HST paid or payable, regardless of whether the club membership fees or dues are a taxable benefit for the employee for income tax purposes.

However, you can claim ITCs for the GST/HST paid or payable on such memberships if you acquire the memberships exclusively for supply in the ordinary course of a business of supplying them.

Exclusive personal use

You cannot claim an ITC for the GST/HST paid or payable on property or services you acquire, import, or bring into a participating province for the exclusive personal consumption, use, or enjoyment (90% or more) of an employee or an employee's relative.

However, you can claim an ITC in the following situations:

  • The consumption, use, or enjoyment of the good or service by the employee or their relative does not give rise to a taxable benefit for income tax purposes and no amounts were payable by the employee for this benefit. The most common type of non-taxable benefit is the paying of moving expenses by an employer. Moving expenses that are considered non-taxable benefits are discussed in Moving expenses and relocation benefits
  • During the same GST/HST reporting period, you make a supply of the property or service to an employee or their relative for consideration that becomes due in that period and that is equal to its fair market value

Property supplied by way of lease, licence, or similar arrangement

You cannot claim an ITC for the GST/HST paid or payable on property supplied by way of lease, licence, or similar arrangement that is more than 50% for the personal consumption, use, or enjoyment of one of the following:

  • if you are an individual, yourself or another individual related to you
  • if you are a partnership, an individual who is a partner or another individual who is an employee, officer, or shareholder of, or related to, a partner
  • if you are a corporation, an individual who is a shareholder or another individual related to the shareholder
  • if you are a trust, an individual who is a beneficiary or another individual related to the beneficiary

However, you can claim an ITC if, during the same GST/HST reporting period, you make a taxable supply of the property to that individual for consideration that becomes due in that period and that is equal to its fair market value.

For more information on ITCs related to employee benefits, see GST/HST Memorandum 9.1, Taxable Benefits (Other than Automobile Benefits).

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