The registrant employer is required to report and remit this tax annually (see the filing and remittance section below). Note that the employee does not pay the GST/HST, as it is already included in the calculation of the taxable benefit reported on the employee’s T4 or T4A slip.
Section 173 effectively ensures that the GST/HST cost is borne by the employee, rather than the registrant employer. However, as with any rule, there are exceptions. The registrant employer is not considered to have collected tax under section 173 in these situations:
- The supply of the property or service that gave rise to the taxable benefit is exempt or zero-rated for GST/HST purposes or is supplied outside of Canada;
- The registrant employer is restricted from claiming an input tax credit (“ITC”) under section 170 on the GST/HST paid or payable on the property or service that gave rise to the taxable benefit;
- The taxable benefit is in respect of an allowance that is included in the income of an employee under paragraph 6(1)(b) the ITA;
- The registrant employer is an individual or partnership and the GST/HST paid is in respect of a passenger vehicle or the aircraft that is not used exclusively (90% or greater) in the registrant’s commercial activities; or
- The registrant employer is not an individual, partnership or financial institution and the GST/HST paid is in respect of a passenger vehicle or the aircraft that is not used primarily (50% or greater) in the registrant’s commercial activities.