HST and Reimbursable Expenses
HST - charging reimbursable expenses to clients
How do I include on my invoice to my client the expenses for which they are going to reimburse me? How do the place of supply rules apply to these expenses?
I am located in Ontario, I do a service for a client in Quebec. I charge them $100 plus 5% GST. I do not charge them 13% HST because they are located in Quebec.
On the invoice, I would also like to include expenses that I incurred to do the service. I have supplies, totaling $11.30 that I purchased in Ontario that include 13% HST. How do I put these expenses on the invoice? Do I enter the total amount ($11.30), and do not indicate taxes at all? Do I only include the federal component of the HST (5%), putting $10.50? Or do I put the entire amount and indicate the 13% HST?
Thanks for you help.
It is my understanding that you charge back the GST/HST that you paid.You purchased supplies in the province of Ontario
, which is a participating province, on behalf of your client. To charge GST, the goods would have had to have been shipped directly to Quebec. However, you physically picked up the supplies for the client in Ontario, so HST is charged.
You must indicate the sales tax type and amount on your invoice so that your client can claim their input tax credits. When you send the bill, you need to attach a copy
of the sales receipt(s) as backup for their GST/HST return. Keep the original
receipt(s) for your files as you need the original copy to claim your ITCs..
Make sure YOU claim any ITCs for expenses that will be reimbursed (just like you would for any expense you make) ... which is why you keep the original invoices.
To be comfortable with your decision on how to record this transaction, you could phone CRA. Make sure you ask for and make a file note of their name, ID and call centre. Ask for a reference too. In the event of an audit, CRA could forgo penalties and late charges if the advice you received from CRA was incorrect.P.S. This post was revised January 2, 2012. An error in who keeps the original vs copy of the receipt was corrected.
P. 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.