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Which tax codes should I use when processing the expense reimbursement?

The tax legislation surrounding employee allowances/reimbursements is slightly different from the guidelines governing a direct purchase from a vendor. In the case of expense allowances and reimbursements, the taxes applied to the reimbursement transaction are those in effect when the reimbursement takes place and NOT when the goods/services were delivered/received. The Expense Reimbursement forms have been updated to reflect the tax codes to be used for the specific expense categories noted on the forms. In addition to the predefined expense categories on the form, use alpha-alpha tax codes whenever taxes should be self-assessed, such as for computers, conference fees and downloaded software purchases from outside Canada.  Any expenses that do not fall into any of the predefined expense categories above should use the regular alpha-numeric expense tax codes (e.g. E1).  These would be indicated in the “Other” section of the Expense Report form.

For more information see the HST Tax Code Summary table.

What tax code should I use when reimbursing for Conference/Registration Fees when the function was attended in the following:

a. Ontario?
b. Prince Edward Island?
c. Nova Scotia, New Brunswick or Newfoundland & Labrador?
d. All other provinces or territories*?
e. Out of the country?

a. Tax code ER for conferences attended in Ontario.
b. Tax code EN for conferences attended in Prince Edward Island.
c. Tax code EN for conferences attended in Nova Scotia, New Brunswick or Newfoundland & Labrador.
d. Tax code EC (self-assess OVAT portion of HST) for conferences attended in GST provinces.
e. Tax code ES (self-assess HST) for conferences out of country.

NOTE: If the conference was held in Canada and no taxes are indicated on the receipt, contact the vendor to find out why. If they say it is not an error because they were only recovering what it cost them to put on the conference, the tax code would be E0. (When a vendor is recovering only their costs, they do not need to charge taxes.) If no taxes were charged in error, self-assess using tax code ES, regardless of which province or territories the conference was held in.

*Provincial taxes incurred in a non-HST province are not recoverable and therefore must be entirely expensed using tax code E0.


Where can I find a list of HST tax codes?

How will Kuehne and Nagel deal with the HST on goods purchased from outside Canada? For example: I receive an invoice from a US vendor for goods I purchased and were shipped to our lab. The invoice does not show any taxes. Should I self assess the HST or will Kuehne and Nagel (K & N) handle that for me?

There should be NO need to self assess the HST on purchases from outside of Canada that are processed by K&N. The University receives an electronic file from K&N and based on coding information contained in the file, the taxes on the Value For Duty (VFD) amount as well as the brokerage fee are calculated and posted to FIS. However, as is the case with all automated system postings, departments should continue to review the entries to ensure that the posting, (i.e. tax treatment derived from the Kuehne and Nagel coding) was appropriate.


Where can I find a quick reference guide for HST applicability of external sales?

Are First Nations status card holders exempt from the provincial part of the HST? I have sales to First Nations status card holders, what tax code do I use when recording the sale and do I need to do anything else?

Maybe, starting September 1, 2010 First Nations status card holders will be exempt from the provincial part of the HST for eligible off-reserve purchases.  Please visit: www.fin.gov.on.ca/en/tax/hst/whatstaxable.html to see which off-reserve purchases are exempt.  The selling department should use tax code ‘R3’ to record any qualifying sales and is required to take a copy (front and back) of the Status Indian Card which should be retained as part of the supporting documentation.  For more information, please refer to GST/HST Information Bulletin B-039R3 on the CRA website: http://www.cra-arc.gc.ca/E/pub/gm/b-039/README.html and the Ontario First Nations Point of Sale Exemptions website:http://www.fin.gov.on.ca/en/guides/hst/80.html.