CRA indicates that no ITCs may be available where job candidates are reimbursed for their expenses

It may be unclear that an employee incurred an expense such as a hotel bill as agent for the employer. S. 175 provides that if the relevant property or service was acquired “in relation to” the activities of the employer, it is effectively deemed to have incurred the expense in relation to its own activities for input tax credit purposes. A similar rule under s. 175 applies to firms that reimburse their partners, and charities and public institutions that reimburse “volunteers.”

CRA confirmed that the s. 175 rule was unavailable where candidates for a position at a company were reimbursed for their travel and meal expenses by a headhunter, who then included those costs in its bill to the company, so that the company was not entitled to ITCs (unless an agency argument could be made, which was not discussed by CRA).

Neal Armstrong. Summary of 8 March 2018 CBA Commodity Tax Roundtable, Q.8 under ETA s. 175.