Blog: GST/HST/QST and taxable benefits – The 2016 deadline is approaching

February 17th, 2017 GST/HST/QST and taxable benefits – The 2016 deadline is approaching

Taxable benefits provided to employees and shareholders during the year 2016 must be disclosed on a T4 (Statement of remuneration paid) and a RL1 (Employment and other income) slip to be issued to the employee on or before February 28, 2017. Taxable benefits including personal use of an employer-provided automobile, car allowance not based on business mileage driven, employer paid parking or meals must be taken into consideration in the preparation of the T4/RL1 slips.

GST/HST/QST consequences can arise when an employer is providing taxable benefits. This impact is often overlooked. The GST/HST/QST calculated on the amount of taxable benefits provided in a calendar year must be reported by the employer on its GST/HST/QST return for the period that includes the month of February of the following year. The employer is not required to collect the GST/HST/QST from its employees but it must be included on the employee’s T4 and RL1.

Certain benefits such as low-interest loans are not subject to GST/HST/QST and therefore, the employer is not required to report the GST/HST/QST in the calculation of the taxable benefit. Also, where an employer cannot claim an Input Tax Credit for the amount of GST/HST or QST paid, the employer does not have to remit the GST/HST/QST on this taxable benefit provided to the employee.

Note that, in situations where a company vehicle is provided or made available to an employee, the GST/HST or QST calculated on the benefit is not reduced by a reimbursement made by the employee. In this case, the GST/HST/QST must be calculated on the full value of the benefit before reimbursement.

The chart below gives the proper rates to be used to calculate the GST/HST/QST on taxable benefits related to the year 2016:

Province of the establishment of the employer where the employee ordinarily reported to work during the year GST/HST on automobile standby charge and other taxable benefits QST on automobile standby charge and other taxable benefits GST/HST on Operating expenses QST on operating expenses
Ontario 12/112 or *8/108 NA 9% or 7.2%* NA
Quebec 4/104 9.975/109.975 3% 6%

 *Rates applicable to large businesses which were subject to recapture of input tax credit during the year 2016.

Contact your Crowe BGK LLP advisor for further details on how the GST/HST/QST on taxable benefits may affect your business.


About the Author:

Martin-Karl Bourbonnais, LL.B, LL.M Tax, is a Tax Manager at Crowe BGK.

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