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ITCs on Motor Vehicle Allowances

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Sales Taxes  ->  GST/HST
    Business  ->  Automobiles, Passenger Vehicles and Motor Vehicles -> GST/HST input tax credits on motor vehicle allowances

GST/HST Input Tax Credits on Motor Vehicle Allowances

Excise Tax Act s. 174

When an employer pays reasonable motor vehicle allowances to an employee for the reimbursement of the employee's motor vehicle expenses while on the job (see Tax free motor vehicle allowances), an input tax credit can be claimed.

The GST rate was reduced from 7% to 5% effective January 1, 2008, which changed the rates to be used for input tax credits on motor vehicle allowances.

The input tax credit amount for 2008 and later years is:

bullet 15/115 x the allowance when the expenses are incurred in a province with 15% HST
bullet14/114 x the allowance when the expenses are incurred in a province with 14% HST
bullet 13/113 x the allowance when the expenses are incurred in a province with 13% HST
bullet 12/112 x the allowance when the expenses are incurred in a province with 12% HST
bullet 5/105 x the allowance when the expenses are incurred in a GST province.

The input tax credit amount for July 1, 2006 to December 31, 2007 was:

bullet 14/114 x the allowance when the expenses are incurred in an HST province, and
bullet 6/106 x the allowance when the expenses are incurred in a GST province.

The input tax credit amount prior to July 2006 was:

bullet 15/115 x the allowance when the expenses are incurred in an HST province, and
bullet 7/107 x the allowance when the expenses are incurred in a GST province.

Canada Revenue Agency Resources:

    - RC4022 General Information for GST/HST Registrants - see Input Tax Credits

    - T4130 Employers' Guide Taxable Benefits and Allowances - Automobile and motor vehicle allowances

Revised: October 06, 2017

 

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