Sam is a commissioned salesperson who negotiates contracts for his employer in Ontario which has an HST rate of 13%. Under his contract of employment, he has to pay his own expenses and is normally required to work away from his employer's place of business. His employer is a GST/HST registrant. Sam received a taxable allowance for the use of his motor vehicle (purchased in December of 2016) that is included on his T4 slip for 2017. Since the allowance is taxable, he can claim a rebate on certain expenses related to that allowance. His travel for work is restricted to Ontario and therefore all of his expenses are incurred within the province.
Sam is now ready to calculate his GST/HST rebate. To claim the rebate, he has to complete Form GST370, Employee and Partner GST/HST Rebate Application. Sam completes Part A. Before he can complete Part B, he has to complete Chart 1 of Form GST370 to calculate his HST eligible expenses. He also must complete Chart 2 because he is claiming CCA on his motor vehicle. Using the information in this guide, he calculates and reports the expenses not eligible for the rebate in column 2C of Chart 1. To calculate the personal-use portion of his motor vehicle expenses, Sam uses the fraction 7,500/30,000. This is the personal kilometres driven (30,000 – 22,500) over the total kilometres driven. He enters this non-eligible portion of CCA in column 2C of Chart 2. He completes Chart 1 and Chart 2 on his Form GST370.
Sam did not enter any amounts in the black areas, since these expenses are not eligible for the rebate.
Sam copies the amounts from the "Total eligible expenses" lines of column 3C of Chart 1 to column 3C of line 5 in Part B of Form GST370, and column 3C of Chart 2 to column 3C of line 6 in Part B, and completes it as shown on page 1 of his Form GST370.
Since Sam is claiming a rebate for his motor vehicle expenses for which he received a taxable allowance, an authorized officer of Sam's employer has to complete and sign Part C.
Sam enters $1,254.17 on line 457 of his 2017 income tax and benefit return. He also attaches Form GST370 to his tax return.
On his 2018 tax return, Sam will include $508.29 ($4,418.25 x [13/113]) on line 104. This amount is the part of the rebate he will receive in 2018 that relates to eligible expenses other than CCA. He will then reduce his UCC at the beginning of 2018 by $745.88 ($6,483.38 x [13/113]).
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