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GST/HST and Taxable Benefits: Impact on Employee and Employer

The provision of some benefits to employees may be subject to GST/HST. Essentially, the CRA wants to ensure that the same amount of GST/HST is paid whether an employee purchases a good or service on his/her own, or whether he/she receives it from his/her employer.

When providing the benefit, the employer must first determine if it is subject to GST/HST. If so, the tax must be calculated and remitted on the GST/HST tax return that covers the last day of February in the following year.

The GST/HST is then included in the value of the benefit on the T4 for the employee.

Taxpayers can usually claim an input tax credit for the GST/HST paid or payable on goods and services supplied to employees or their relatives as a benefit if it is related to the business’ commercial activities.

Guide T4130 (Chapter 5) – Employers Guide, Taxable Benefits and Allowances is a resource which discusses the GST/HST requirements for employment benefits.