GST on Mileage

by Tim
(Ottawa, Ontario, Canada)

When charging mileage as a disbursement to a client I have to collect GST. I charge the current treasury board rate.

To calculate the GST to be charged to the client for this disbursement do I calculate GST by adding 5 % to the treasury board rate? Or does the treasury board rate already contain the GST, in which case I would subtract out 5% to get the proper GST number?



Hi Tim,

It is my understanding that government travel allowance rates build the GST into the rates. This means you would bill the client the treasury board rate divided by 1.05 . The 5% GST collected would be on that invoiced amount. This ensures you are only "recovering" the treasury board rate.

For example, the treasury board rate at January 1, 2010 for Ontario is 54.5 cents / km. Their chart states it includes taxes. So your calculation would be 54.5 / 1.05 = 51.9 (invoiced amount) x 5% GST = 2.6 (GST collected).

From the expense side, if your employees use their personal vehicle for business purposes, there are published tax rate deduction limits for the tax-exempt portion of allowances that CRA considers reasonable. These rates are NOT the same as the treasury board rates.

Thanks for the question. :0)

See you on the next page .... Your tutor Lake

Comments for GST on Mileage

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Jan 20, 2010
GST on Mileage
by: Lake

Hi Tim,

I should have included this when I responded to your question earlier.

I think this link might also interest you. It was a similar question to yours.


As an incorporated business we have chosen to use our personal vehicle for business and charge $.52/km for mileage. Most of our contracts cover travel expense and we bill this mileage to clients.

Does the $.52/km include GST? Can we claim GST tax credits on this expense when paid to us personally?

Jul 13, 2010
Charging and Paying Mileage
by: Anonymous

To further ask in regards to this mileage, and now with the HST in BC...

We are invoicing a client for mileage of our employees, and in turn paying our employee what we bill, without any markup.

Do we charge our client HST, and submit to the gov't? and only pay our employee the mileage? And is it only a Taxable Benefit when our employee earns $5000?

This is all very confusing!

I appreciate your input.

Jul 14, 2010
HST input tax credits on auto allowances
by: Bookkeeping Essentials

Here is my understanding of how it works:

Section 174 of the Excise Tax Act deals with GST/HST input tax credits on auto allowances. CRA publication G400-3-11 Allowances and Reimbursements item 13 states:

When a GST/HST registered employer pays a reasonable allowance to an employee for the use of a motor vehicle in Canada, and no amount is included in computing the individual's income for income tax purpose, the employer is deemed to have paid tax equal to the ITC of the amount of the reasonable allowance.

It is my understanding that as of July 1, 2010, the ITC that can be claimed is:

5/105 if you are in a non-participating province
13/113 in a participating province other than BC and Nova Scotia
12/112 in BC
15/115 in Nova Scotia

As per a ruling from the Vancouver office , CRA does not care what your business bills your client for these expenses.

The CRA reasonable allowance of $0.52/km includes GST/HST. Therefore if you are not marking up the allowance charged the client, you would back out the HST as follows:

$0.52 / $1.12 BC HST = $0.46 = amount to bill client before charging HST

This is a good deal for the employer as the HST ITC is greater than the GST ITC.

If you go to the CRA publication T4130 Employers' Guide - Taxable Benefits and Allowances, if the allowance is reasonable, it is not taxable. The portion of the allowance that is over what CRA considers reasonable is a taxable benefit.

I would extrapolate that to mean that only the reasonable allowance portion is eligible for the ITC.

Hope this helps. If at any time I find out any of the above changes, I will post back here.

Aug 27, 2010
Charging and Paying Mileage and Incidentals
by: Anonymous


Now I understand that I should charge HST on mileage. My question is can I claim ITCs if my employee claimed $100 mileage? Does mileage rule apply to Incidentals as well?

Thank you


Aug 27, 2010
HST On Mileage
by: Bookkeeping-Essentials

Hi Lei,

Follow the links in the post above yours.

Just a point ... you do not charge HST on mileage, it is included in CRA's "reasonable allowance" amounts.

As stated above, an employer can claim ITCs on the mileage allowance paid to the employee.

As explained in Employee Auto Allowance Tax Rates:

Reimbursement of toll or ferry charges or supplementary business insurance is acceptable provided you did not calculate your allowance to include these reimbursements.

The allowance should only be paid on the business kilometers and the employee should NOT be reimbursed for expenses related to operating the vehicle as this allowance is meant to cover those costs.

You haven't told me what kind of incidentals. If it is personal expenses paid by the employee while doing business for you, the employee should submit an expense report with all receipts attached.

If you are still unsure of your situation, you should call CRA for confirmation.

Dec 01, 2010
HST on meal allowances
by: Lei

Hi Laura,

Thank you so much for your response! I pay employees meal allowances by using the treasury board rate.

For example, the current rate for breakfast is $14.8 including taxes. I am in Ontario, so I claim half amount of ITC which is $0.85 ($14.8 * 0.13/1.13 * 50%).

To calculate the HST to be charged to the client for this disbursement do I calculate HST based on $13.95 ($14.8-$0.85) or $13.1 ($14.8-$0.85 * 2) or $14.8?


Dec 01, 2010
Reimbursement of Expenses
by: Bookkeeping Essentials

Hi Lei,

As previously talked about in reimbursement of expenses from clients, the CRA does not care what you bill your clients ... it depends what is in your contract.

It sounds to me like you don't mark up disbursements, so presumably you are trying to just recover your cost outlays. To me, that means you would bill your meals so the total cost including sales tax is $14.80 ... which equals $13.10 plus $1.70 HST.

It is my understanding that as your client is a GST/HST registrant and you are not marking up your expenses but recovering at cost, you cannot claim ITCs on reimbursable expenses as you will be recovering your sales tax through billing your client. Your client gets to claim the ITC. That means you need to photocopy / scan the receipts and attach the original receipts to your clients invoice. This enables them to claim the ITC. You were only purchasing on their behalf so to speak.

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

Dec 01, 2010
More Research Needed
by: Laura


I've come across some information which says you can claim ITCs on reimbursable expenses. I am going to do some research. I will post back here with my findings.

Dec 02, 2010
by: Lei

Thanks Laura, I really appreciate it!


Dec 02, 2010
Reimbursable Expenses and Sales Tax
by: Laura

Hi Lei,

I thought there were two ways to deal with ITCs on reimbursable expenses:

1) You are just recovering your expense purchased for your client or incurred while working for the client (mileage/meals that type of thing) - no markup (probably quoted as such in a contract) so you do not claim ITC's, you recover your sales tax through your client invoice. You give the original invoice to the client to claim the ITC.

2) You markup your expenses or you use your own supplies - you claim ITCs and charge sales tax on the reimbursed amounts on the client invoice. You keep the original invoice for your records and give the client a copy as backup for the invoice.

I checked in to one of my bookkeeping forums. A reliable source from there said ... are you ready ... I was wrong. :0(

The CICA Handbook requires that revenue from reimbursements not be netted. The Income Tax Act follows GAAP.

This means that all purchases should be expensed and original documentation retained as proof of purchase in the event of an audit. All reimbursements would require GST/HST be charged when billed.

As I have found conflicting information here, you might want to call CRA and get their opinion. The GST/HST Guide is unavailable on their website as they are updating it for all the BC and Ontario HST related changes, so I haven't found an exact reference yet. If they can give you one, I would appreciate it if you could post back here with it.

Feb 21, 2011
HST on mileage charges
by: HN

I am reactivating my incorporated consulting business.

I charge mileage to my clients at $0.45 per km. Should I add HST or is kilometrage HST exempt?

I also bill meals and accomodation at cost as per receipts. Should I add HST?



Feb 21, 2011
Charging HST
by: Bookkeeping Essentials

As the previous posts point out, it depends on your contract with your clients. All mileage rates quoted by the Government include HST.

As your rate is below CRA's reasonable allowance of $0.52/km, which includes GST/HST, I would add HST over and above the $0.45 if your contract allows it.

With regards meals and accommodation, your receipts include HST. I wouldn't add any HST but break out the HST from your receipts ... but it again depends on your contract. If you are flat rating it or marking up, then I'd think you need to add HST.

Clear as mud, right?

Feb 22, 2011
Thank You my "contract" is simply
by: HN

My "contract" is really my quotation letter for my time plus a standard statement that kilometrage is charged extra at $0.49 per km and out of pocket expenses (meals and accommodation and gratuities etc.) at cost.

Obviously I don't want my clients to incur unnecessary taxes but I don't want to run afoul of the tax folks either.

Why I wrote you despite the earlier posts is I am still unclear re "contract" as, depending on how you interpret it, the context suggests your advice is really re dealing with the Feds.....

My work is for the private sector and not for profit and consists of charges for time plus the expenses line referenced above..

I can read your advice 2 ways:

A) I should always charge it on kilometrage but not on meals and accomodation.


B) if my quotation letter (essentially my contract/engagement contract) makes no reference to charging HST on kilometrage then I don't have to.

MY FIRST THOUGHT WAS ... Knowing that the gov't wants every pound of flesh they can get I find this a tad hard to believe that I have the option.

It basically means that they the Feds & Province don't get paid HST purely at my option as to how I choose to phrase my quote. If that is really the case then I won't charge it. I don't mark up expenses and my kilometrage rate I think a fair estimate devoid of markup.

BUT UPON REFLECTION.. I assume that the theory is they have already collected the HST on my inputs... gas, car maintenance, car purchase, etc and as I'm not marking it up it's a waste of effort to charge it and then try to stipulate offsets input credits from gas purchases etc etc etc.

Am I right therefore in not charging HST on either kilometrage or out of pocket expenses as long as I don't mark them up?

Thanks You're extremely helpful.

Feb 22, 2011
Taxable Sales
by: Bookkeeping Essentials

I don't have a lot of experience with not for profit, but it is my understanding that if you are a GST/HST registrant, you must charge GST/HST on all sales.

I didn't mean you don't charge GST/HST on your mileage. What I was trying to say ... rather poorly ... is you can choose whether your kilometre rate includes or excludes sales tax.

For example you can bill one of two ways:

Option one: Your billing rate could already include sales tax in your rate calculated as follows: 43.75 cents / km plus HST @ 12% (B.C.) = 49 cents / km


Option two: Your billing rate could already exclude sales tax from your rate calculated as follows: 49 cents / km plus HST @ 12% (B.C.) = 54.88 cents / km

As you can see both options are still charging the sales tax.

With regards meals and entertainment, if you are asking to be reimbursed for costs, then your costs already include sales tax but you should itemize the sales tax component on your invoice as, I believe, non-profits get a GST/HST rebate.

May 17, 2011
Non-GST/HST Registered
by: Anonymous


We are new at starting up a partnership business and are about to have our first client. We are not HST registered because we don't know if we will earn enough revenue that we need to register. In the interim, how should we bill for our mileage to our clients considering we are not HST registered?

What is the allowable mileage rate in Ontario we can charge?

On the flip side, if I am using my personal vehicle to do work for the partnership, how should I reimburse myself for my mileage and at what rate? Should HST be included there?


Jul 28, 2011
Check out this site
by: Lake

Hello Anonymous,

Somehow I missed responding to your question. Sorry about that.

My first suggestion is you need to spend some time on this site reading. The reaon I created the site is that small business owners who can't afford a bookkeeper have a place to get information ... as long as they put in some of their own sweat equity.

With regards your first question on allowable mileage rates in Ontario, go back and read the above posts. What you charge out is up to you.

Now if you were talking about employee automobile allowance rates, that's a different kettle of fish.

There are three distinct areas of CRA rules pertaining to vehicles:

(1) employee supplied automobiles
(2) employer supplied automobiles, and
(3) self-employed individuals.

When dealing with using your own vehicle for business, I have an article on that. Click here to read about it.

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