When an Ontario employer reimburses an employee's expenses, is there an HST consideration?

Yes. When an Ontario employer reimburses an employee for expenses the employee incurred on the employer's behalf — business travel, office supplies, client entertainment — the employer may be able to claim input tax credits on the HST embedded in those reimbursements, even though it was the employee who originally paid the HST.

To claim ITCs on employee expense reimbursements, the employer must obtain receipts from the employee that include the supplier's name, the date, the total paid, and the HST registration number of the original vendor. The employer then calculates the deemed HST embedded in the reimbursement and claims it as an ITC.

The employee cannot claim ITCs personally (that is the employer's right), so the employer should always collect original receipts from employees — not just totals on an expense report. Entertainment and meal reimbursements remain subject to the 50% ITC restriction even when reimbursed through expense claims. Per-kilometre vehicle allowances above the CRA's prescribed rate are also treated differently from receipted fuel and maintenance costs.