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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

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:

	15/115 x the allowance when the expenses are incurred in a province with 15% HST
	14/114 x the allowance when the expenses are incurred in a province with 14% HST
	13/113 x the allowance when the expenses are incurred in a province with 13% HST
	12/112 x the allowance when the expenses are incurred in a province with 12% HST
	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:

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

The input tax credit amount prior to July 2006 was:

	15/115 x the allowance when the expenses are incurred in an HST province, and
	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: July 22, 2024

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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