A Practical, Easy-to-Read Guide for Future Tax Preparers
Table of Contents
- 1. Claiming the GST/HST Rebate and Understanding Eligibility
- 2. 🧾 Example of the Process for Claiming the GST/HST Rebate on the Tax Return
- 3. 🧰 New for 2022: Overview of the Labour Mobility Tax Deduction for Tradespeople
- 🎯 Final Wrap-Up
1. Claiming the GST/HST Rebate and Understanding Eligibility
1.1 💡 What Is the GST/HST Rebate for Employees?
The GST/HST rebate allows employees to recover the sales tax portion of their work-related expenses.
👉 In simple terms:
If an expense is deductible for employment purposes and includes GST/HST, you may get that tax refunded.
Example:
- Office supplies, internet, or vehicle costs used for work
- GST/HST included → eligible for rebate
1.2 ✅ Who Is Eligible for the GST/HST Rebate?
To qualify, the employee must meet all conditions:
✔️ Employer requires the employee to pay expenses (Form T2200 signed)
✔️ Expenses include GST/HST
✔️ Employer is a GST/HST registrant
✔️ Individual is an employee or partner (not self-employed)
🚫 Not eligible: Employees of financial institutions
1.3 ⚙️ How the Rebate Works
The CRA calculates and refunds the GST/HST portion using a structured process:
1️⃣ Report employment expenses → Form T777
2️⃣ Calculate rebate → Form GST370
3️⃣ Claim rebate on tax return
📌 No manual tax calculation required — CRA handles it via the form
1.4 🔁 Important Note: The Rebate Becomes Taxable Next Year
⚠️ The rebate must be reported as income in the following year
Example:
- Claim rebate in 2024 → report as income in 2025
👉 Reason: prevents double benefit (deduction + rebate)
1.5 🧾 Do You Need to Send Receipts to the CRA?
- ❌ No need to submit receipts when filing
- ✅ Must keep:
- Receipts
- Form T2200
- Supporting documents
🕒 CRA may review claims later (even years after filing)
1.6 🪜 Step-by-Step Summary
| Step | Action | Form | Completed By |
|---|---|---|---|
| 1 | Confirm required expenses | T2200 | Employer |
| 2 | Report expenses | T777 | Employee |
| 3 | Apply for rebate | GST370 | Employee |
| 4 | Report rebate next year | T1 Return | Employee |
1.7 🧠 Common Example
Emma works for a GST/HST-registered company.
She pays for internet and utilities for work-from-home duties.
✔️ Claims expenses → T777
✔️ Applies rebate → GST370
✔️ Receives refund
✔️ Reports it as income next year
1.8 🔑 Key Takeaways
| Concept | Explanation |
|---|---|
| Purpose | Refund GST/HST on work expenses |
| Eligibility | Must meet all CRA conditions |
| Form | GST370 |
| Tax Treatment | Taxable next year |
| Records | Keep all documentation |
💡 Final Tip
Even small GST/HST rebates can boost refunds significantly, especially for clients with:
- Home office expenses
- Vehicle expenses
2. 🧾 Example of the Process for Claiming the GST/HST Rebate on the Tax Return
2.1 🔍 Determine Eligibility
An employee qualifies if:
✔️ Expenses are required for work
✔️ Not fully reimbursed
✔️ Employer is GST/HST registered
2.2 📦 Identify Eligible Expenses
✅ Eligible Expenses
- Office supplies
- Internet / phone (work-use portion)
- Parking
- Vehicle expenses (fuel, repairs, lease)
❌ Non-Eligible Expenses
- Insurance (no GST/HST)
- Salaries to assistants
- Fees without GST/HST
👉 Only expenses with GST/HST qualify
2.3 🧮 Record Expenses on Form T777
- Enter total expenses including GST/HST
- No need to separate tax
📍 Provincial handling:
- HST provinces → HST column
- GST provinces → GST column
2.4 📄 Complete Form GST370
To calculate rebate:
Include:
- Employer’s business number
- Total expenses from T777
👉 CRA calculates rebate automatically
2.5 💵 Report the Rebate on the Tax Return
- Enter on Line 45700
- Treated as a refundable credit
✔️ Increases refund
✔️ Reduces tax owing
2.6 🔁 Include the Rebate as Income Next Year
- Report on Line 10400 (Other Employment Income)
📌 Prevents double benefit
2.7 🧠 Example Scenario
Amanda (Ontario):
- Claims expenses → T777
- Rebate → $693
- Added to refund (Line 45700)
- Next year → reports $693 as income
🔍 Key Takeaways
- Use T777 → GST370 → Line 45700
- Report rebate next year on Line 10400
- Only GST/HST-related expenses qualify
3. 🧰 New for 2022: Overview of the Labour Mobility Tax Deduction for Tradespeople
3.1 🆕 Introduction
A deduction designed for tradespeople working temporarily away from home.
✔️ Covers short-term relocation costs
✔️ Helps reduce out-of-pocket expenses
3.2 🔍 Why This Deduction Was Introduced
Trades workers often travel for short projects but couldn’t claim expenses before.
📌 Now allowed: up to $4,000/year deduction
3.3 💡 Key Benefit: Deduction vs Credit
- Deduction → reduces taxable income
- Savings depend on tax rate
🧮 Example:
$4,000 deduction at 30% tax rate = $1,200 tax savings
3.4 🏠 Eligible Expenses
✔️ Temporary lodging (hotel, rental)
✔️ One round-trip travel
✔️ Meals during travel
🚫 Not eligible:
- Meals/lodging at job site
- Personal expenses
3.5 📍 What Makes a Location Eligible?
📏 Distance Test
- Must be ≥150 km from residence
⏱ Duration Test
- Must be ≥36 hours
🇨🇦 Location Test
- Must be in Canada
3.6 💰 Deduction Limits and Conditions
- Max: $4,000/year
- Limit: 50% of income per job site
📊 Example:
Earn $1,500 → max claim = $750
3.7 ⚖️ Other Important Conditions
✔️ Must maintain a primary residence
✔️ Expenses must be temporary
✔️ Cannot claim reimbursed expenses
🚫 Cannot double claim:
- Moving expenses
- T777 expenses
3.8 🔄 Carrying Forward the Deduction
- Unused portion → carried forward
- Limit: 2 years total
3.9 ⚠️ Avoiding Double Counting
🚫 Do not:
- Claim same expense twice
- Mix T777 and mobility deduction
👉 This is a common CRA audit issue
3.10 🧠 Example Scenario
John (electrician):
- Hotel: $1,500
- Travel: $250
- Total: $1,750
Income: $3,500
✔️ Max allowed (50%) = $1,750
✔️ Full deduction allowed
3.11 🧾 Summary of Key Points
| Rule | Requirement |
|---|---|
| Max deduction | $4,000/year |
| Distance | ≥150 km |
| Duration | ≥36 hours |
| Income limit | 50% of job income |
| Eligible costs | Travel, lodging, travel meals |
| Carry forward | Up to 2 years |
3.12 🧩 In Summary
The Labour Mobility Deduction:
✔️ Supports trades workers working away from home
✔️ Reduces taxable income
✔️ Requires careful tracking of expenses
🎯 Final Wrap-Up
This module introduces two important concepts:
✨ GST/HST Rebate → recover tax paid
✨ Labour Mobility Deduction → reduce taxable income
🧠 As a Tax Preparer, Always Remember:
✔️ Verify eligibility carefully
✔️ Use correct forms (T2200, T777, GST370)
✔️ Avoid double-claiming expenses
✔️ Report income in the correct year
💬 Pro Tip:
Mastering these “small” areas can significantly improve client refunds — and that’s what makes a great tax preparer.
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