S3M Construction – Court of Quebec finds that an employer bore its employees’ parking costs for its own benefit, so that it was entitled to ITRs

S3M was in the business of providing the services of its employees at construction work sites of its clients for hourly charges. S3M reimbursed its employees for their parking charges for parking the vehicles of them or of S3M close to the construction sites. They were required by S3M to bring equipment (often heavy) to those sites.

The issue of whether S3M was entitled to input tax refunds (ITRs) under the Quebec equivalent of ETA s. 175(1) was considered by Sauriol JCQ to turn on whether the parking charges were incurred in relation to the activities of S3M or whether their reimbursement instead represented a taxable benefit to the employees.

In finding that S3M incurred the parking charges principally for its own business benefit (so that it was entitled to the ITRs), she accepted that having employees park close to the construction site reduced the time spent moving equipment back and forth between their vehicles and the site, thereby reducing the hourly charges billed to the client, and also reduced losses from equipment theft.

Neal Armstrong. Summary of Construction S3M ltée v. Agence du revenu du Québec, 2026 QCCQ 4315 under ETA s. 175(1).