6 May 1992 Roundtable, 9211110 F - Timing Of Deduction For Gst Remittance On Emloye Benefit

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

May 6, 1992

DRAFT RESPONSE

PRAIRIE PROVINCES TAX CONFERENCE

MAY 19 & 20, 1992

2. Revenue Canada has previously informed us that any Goods and Services Tax remitted on employee benefits becomes a deduction for tax purposes in the year that it is paid.  Will Revenue Canada allow a deduction for the fiscal period in which the related benefits were incurred (i.e , accrual accounting in accordance with Section 9 of the Act)?  For example, a corporation with a December 31, year end would pay the GST in the following taxation year with respect to benefits incurred during the current taxation year.

Response

By virtue of subsection 173(2) of the Excise Tax Act, the amount of GST payable in respect of taxable employee benefits is deemed to be payable on the last day of February following the year in which the taxable benefit was received or enjoyed.  Accordingly, the GST payable in respect of 1992 benefits will become payable on the last day of February 1993 and, assuming the employer files GST returns monthly, should be remitted with the February 1993 GST return in March 1993. For an employer with a fiscal year end of December 31st who has remitted the GST payable when due, the GST payable in respect of taxable employee benefits will be deductible for income tax purposes in 1993 regardless of which method is used to compute income for tax purposes.