CRA provides a listing of expenses typically not incurred as agent

Expenses incurred by a supplier of taxable services as agent for its client are not subject to GST/HST when it is reimbursed for those amounts by the client, whereas expenses incurred by it as principal are subject to GST/HST if it is able to add those amounts (including any GST/HST on those expenses for which it is not entitled to ITCs, e.g., 50% of restaurant bills) to its invoice for its taxable services. CRA provided the following list of expenses which are generally not incurred as agent for the client:

  • office supplies, if they are associated with the service being performed by the supplier for the client
  • air travel
  • local transportation, such as a taxi
  • parking
  • hotel or other accommodation
  • per diem amounts, such as meals
  • car rentals and gasoline
  • an automobile allowance, where the supplier’s personal vehicle is used in the performance of the service

Before discussing the 50% denial of ITCs for food, beverage and entertainment expenses, CRA indicated:

Generally, a client who is a registrant can claim an ITC for the GST/HST paid or payable on the out-of-pocket expenses incurred by a supplier as agent of the client … to the extent that the supplier’s services and the supply acquired by the supplier are consumed, used or supplied in the course of the client’s commercial activities.

This suggests that CRA may not generally require the supplier to provide the invoices for the expenses, that it incurred as agent, to the client.

Neal Armstrong. Summaries of GI-197 “Out-of-Pocket Expenses” 17 December 2021 under ETA s. 123(1) - supply, and s. 236(1).