GST/HST and Tax Exempt Bodies

(Canada)

We are considering a contract for services with an out-of-province GST exempt body. Some of the work will be done by subcontractors that will charge us HST and that we will pay.

In submitting expenses to this exempt body for reimbursement, assuming a subcontractor bills us for $1000 + HST = $1,130, I assume we cannot claim the ITC. However, can I submit the bill as $1,130 total expense? Or can I only submit $1,000?

We are a not-for-profit organization and are not tax exempt. I can't find anything directly in CRA publications to help me with this.

Many thanks for your assistance.

Hi,

CRA publication RC4022 General Information for GST/HST Registrants has recently been revised to reflect the new supply rules that came into effect earlier this year.

Although you didn't tell me what kind of exempt body, I looked at the section on Supplies to diplomats, Indians, and governments ... towards the bottom third of the document ... which are/were common tax exempt bodies. Under Provincial and Territorial Governments, it says:

"You can claim ITCs for any GST/HST paid or payable on purchases you made to make taxable supplies of goods and services to provincial or territorial governments."



CRA publication RC4081 GST/HST Information for Non-Profit Organizations, under the section titled How does the GST/HST work?, says:

"You can claim an input tax credit (ITC) on your GST/HST return to recover the GST/HST paid or payable on purchases and expenses you use, consume, or supply in your commercial activities. ... as a registrant, is that although you do not collect the GST/HST on zero-rated or exempt supplies of property and services, you can only claim ITCs for the GST/HST paid or payable on purchases used to make zero-rated supplies of property and services."

I hope this helps.





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