Subsection 236(1)
Administrative Policy
GI-197 “Out-of-Pocket Expenses” 17 December 2021
In the context of a discussion of the treatment of expenses incurred by a supplier of services to a client otherwise than as agent for the client, CRA discussed the limitation in s. 236(1):
Generally, a registrant who is liable for the GST/HST paid or payable on its food, beverage and entertainment expenses may recover the GST/HST paid or payable on those expenses as an ITC. However, the ITC claimed is subject to a 50% recapture, which effectively restricts the ITC to 50% of the GST/HST paid or payable on these expenses. This recapture applies when the registrant is subject to the limitation rules for deducting the expenses under the Income Tax Act (ITA), or would be subject to those rules if the registrant were a taxpayer under the ITA.
The limitation rules under the ITA do not apply when the expenses are reasonably reimbursed by another person, and where they are specifically identified to the person in writing as food, beverages, or entertainment expenses. However, the limitation rules then apply to that other person.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Supply | 621 | |
| Tax Topics - General Concepts - Agency | listing of expenses typically not incurred as agent | 172 |
| Tax Topics - Income Tax Act - Section 67.1 - Subsection 67.1(2) - Paragraph 67.1(2)(c) | no limitation under s.67.1 where specific reimbursement | 91 |
2 March 2007 External T.I. 2006-0185471E5 F - Frais de représentation - 67.1
CRA confirmed a 1998 agreement regarding, where employees received a daily allowance to cover the costs of meals and accommodation while away from home and at a remote work site, what portion of the allowances was to be considered to be the meal expense portion that was subject to the ETA s. 236(1) ITC limitation:
|
Amount of daily allowance |
Meal portion |
|
$75 and under |
15% of the balance |
|
Between $75 and $100 |
$11.25 plus 20% of the balance |
|
Between $100 and $125 |
$16.25 plus 30% of the balance |
|
Over $125 |
$23.75 plus 40% of the balance |
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 67.1 - Subsection 67.1(1) | confirmation of 1998 agreement as to portion of remote work site daily allowances to be treated as for meals rather than accommodation | 316 |