Employers’ Treatment of GST/HST on Employees Taxable Benefits

Some employee taxable benefits are subject to GST/HST, while others are not.

Non-cash benefits and cash reimbursements include GST/HST, except for zero-rated or exempt supplies. Cash allowances are not subject to GST/HST. See T4130, Employers’ Guide – Taxable Benefits for a list of taxable allowances and benefits that are subject to GST/HST.

It is the employer’s responsibility to report and remit any GST/HST included in the taxable benefits paid to its employees. The GST/HST to be remitted is based on the applicable GST/HST rate of the province of residence.

The 2014 GST/HST rates are as follows:

• New Brunswick, Newfoundland and Labrador and Ontario - 13/113
• Nova Scotia – 15/115
• Prince Edward Island – 14/114
• All other provinces and territories – 5/105

Example 1

AJ Corp paid $1,500 annually for their employee John Jones club membership at ABC Inc. Both companies are located in British Columbia.

Taxable benefit reported on John’s T4 - $1,500

GST considered to have been collected by AJ Corp $1,500 x 5/105 = $71.43

GST to be remitted by AJ Corp $71.43

Example 2

Smiths Corp paid Mary Jane $5,900 to moving and relocating from Ottawa to Toronto

Taxable benefit reported on Mary’s T4 - $5,900.

HST considered to have been collected by Smiths Corp $5,900 x 13/113 = $678.76

HST to be remitted by Smiths Corp $678.76