*** Transcriber's Note: Please set your voice synthesizer to read most punctuation. When you encounter the caret (^) sign, please enter the applicable information, if necessary. Throughout this document, charts and form are identified by three-plus (+++) symbols at the beginning and at the end. *** Canada Customs and Revenue Agency (Cover page) RC4091(E) Revision 2003 GST/HST Rebate for Partners Includes Form GST370 PAGE 2 Before you start Is this guide for you? This guide contains information for members of a partnership that is a GST/HST registrant on how to apply for the GST/HST partner rebate. If you are a member of a partnership that is a GST/HST registrant, this rebate may be available to you for the GST/HST you paid on certain expenses that you deducted from your share of the partnership income on your income tax return. The rebate may also apply to GST/HST paid on motor vehicles, musical instruments, and aircraft for which you deducted capital cost allowance for income tax purposes. If you are an employee and want to claim a rebate for the GST/HST you paid on employment expenses that you deducted on your income tax return, see the guide called Employment Expenses. It also includes Form GST370, Employee and Partner GST/HST Rebate Application. Note If, after 2001, you are employed as an apprentice mechanic and you deducted expenses for apprentice mechanic tools on your income tax return, you may be eligible to claim a rebate for the GST/HST you paid on these expenses. For more information, see the guide called Employment Expenses. Forms and publications To claim this rebate, you have to file Form GST370, Employee and Partner GST/HST Rebate Application. You will find a copy of the form at the end of this guide. Throughout this guide, we also refer to other forms and publications, which you can order from our Web site at www.ccra.gc.ca/forms or by calling us at 1-800-959-2221. Internet Visit our Web site at www.ccra.gc.ca on the Internet. You may want to bookmark this address for easier access to our Web site in the future. Teletypewriter (TTY) users If you have a hearing or speech impairment and use a TTY, you can call our toll-free, bilingual enquiry service at 1-800-665-0354 during regular business hours. Visually impaired persons can order publications in braille or large print, or on audio cassette or computer diskette, by calling 1-800-267-1267 weekdays from 8:15 a.m. to 5:00 p.m. (Eastern Time). This guide uses plain language to explain some of the most common tax situations. If you need more help after you read this guide, call our Business Enquiries line at 1-800-959-5525. PAGE 3 Table of contents What is GST/HST? page 4 GST/HST rebate for partners, page 4 Definitions of registrant, allowance, and reimbursement, page 4 Do you qualify for the rebate? page 4 Eligible expenses, page 4 Non-eligible expenses, page 5 Capital cost allowance (CCA) on motor vehicles, musical instruments, and aircraft, page 5 Allowances, page 5 General information on filing your rebate application, page 6 Filing deadline, page 6 Rebate restriction, page 6 Overpayment of a rebate, page 6 How a rebate affects your income tax, page 6 Keeping records, page 6 How to complete your rebate application, page 6 Area A - Identification, page 7 Area B - Rebate calculation, page 7 - Situation 1 - The only expenses you deducted for income tax purposes are union, professional, or similar dues, page 7 - Situation 2 - You deducted only 7% GST expenses on your income tax return, page 7 - Situation 3 - You deducted only 15% HST expenses on your income tax return, page 7 - Situation 4 - You deducted both 7% GST and 15% HST expenses on your income tax return, page 8 - Situation 5 - Property and services brought into a participating province, page 9 Area C - Declaration by claimant's employer or partnership, page 9 Area D - Certification, page 9 After completing your rebate application, page 9 Examples, page 10 PAGE 4 What is GST/HST? GST is a 7% tax charged on most supplies of goods and services made in Canada. HST is a 15% tax charged on most supplies of goods and services made in the three participating provinces (Nova Scotia, New Brunswick, and Newfoundland and Labrador). The 15% HST is a combined rate of tax which is made up of the 7% GST and the 8% provincial sales tax that is in effect in each of the participating provinces. GST/HST rebate for partners This rebate may be available to you if you are an individual who is a member of a partnership that is a GST/HST registrant. The rebate is for the GST/HST you paid on expenses you deducted from your share of the partnership income on your income tax return. However, special rules apply if your partnership paid you an allowance in respect of those expenses. See the section called "Allowances" on page 5 for more information. The GST/HST rebate is limited to the amount of the input tax credit (ITC) that would have been available to your partnership if the partnership had incurred the expenses directly. Normally, the partnership can claim an ITC for GST/HST paid or payable on business expenses it incurs for consumption, use, or supply in the course of its commercial activities (meaning, in making GST/HST taxable supplies). In effect, the rebate allows an individual partner, who personally pays GST/HST on expenses related to the partnership, to recover that GST/HST in a way similar to the way the partnership recovers the GST/HST it pays on its expenses. The rebate is calculated as a fraction of those expenses you deducted from your share of the partnership income on your income tax return, and on which you paid GST/HST. This fraction is: - 7 divided by 107 for expenses on which you paid 7% GST; and - 15 divided by 115 for expenses on which you paid 15% HST. You may also be entitled to a rebate if you purchased property or services outside a participating province and brought them into a participating province. An additional calculation may be required in these circumstances. For more information, read the section called "Situation 5 - Property and services brought into a participating province" on page 9. Definitions of registrant, allowance, and reimbursement A registrant is a person who is registered, or who is required to be registered, for GST/HST purposes. An allowance means any payment, periodic or otherwise, which you as a member of a partnership receive from the partnership, in addition to your partnership income, without having to account for its use. A reasonable allowance is not included in your income for income tax purposes. For example, you usually do not include an allowance for a motor vehicle in your income when it is based solely on a reasonable per-kilometre rate. Note If your partnership pays you an allowance, special rules apply with respect to the GST/HST partner rebate. See the section called "Allowances" on page 5 for details. A reimbursement means a payment you receive from your partnership as a repayment for amounts you spent in connection with your partnership's business. Generally, you complete an expense report detailing the amounts you spent. Usually, a reimbursement is not taxable for income tax purposes, unless it is for payment of your personal expenses. For purposes of the GST/HST rebate, if you receive an allowance or reimbursement from the partnership, we will treat that allowance or reimbursement the same way we would if you were an employee. For more information on allowances and reimbursements, see Interpretation Bulletin IT- 522, Vehicle, Travel and Sales Expenses of Employees. Do you qualify for the rebate? As an individual who is a member of a partnership, you may qualify for the GST/HST partner rebate if: - the partnership is a GST/HST registrant; and - you personally paid GST/HST on expenses that: - you did not incur on the account of the partnership; and - you deducted from your share of the partnership income on your income tax return. As a partner, you can only claim a rebate to the extent that the partnership could have otherwise claimed an input tax credit (ITC) if it had incurred the expense directly. Therefore, if a partnership provides only exempt goods and services, and therefore cannot claim any ITCs (for example, doctors providing exempt medical services), you would not be eligible to claim a GST/HST partner rebate for the expenses you deducted from your share of the partnership income. The rebate is limited to the amount that would qualify for an ITC if the partnership had incurred the expenses and paid GST/HST in the last reporting period of its last fiscal year that ended in the calendar year for which you are claiming the rebate. Eligible expenses Your partnership agreement may identify expenses that you are required to pay personally. Common examples of such expenses include: - office expenses; - travelling expenses; PAGE 5 - food, beverage, and entertainment expenses; - lodging; - some motor vehicle expenses; - leasing costs; - parking costs; - miscellaneous supplies (for example, street maps, stamps, pens, pencils, and paper clips); and - capital cost allowance on motor vehicles, aircraft, and musical instruments you acquired after 1990. Non-eligible expenses Non-eligible expenses include the following: - Expenses on which you did not pay GST/HST, such as: - most expenses you incurred outside Canada (for example, gasoline, accommodation, meals, and entertainment); - acquisitions of zero-rated goods and services (meaning, goods and services that are subject to GST/HST, but at a rate of 0%), including basic groceries, prescription drugs, medical devices, most agriculture and fish products, and certain expenses that farmers and fishers incur; - acquisitions of exempt goods and services (meaning, goods and services that are not subject to GST/HST) including most health and dental care services, most educational services, medical underwriting fees, insurance premiums, bonding premiums, mortgage interest, residential rents, interest, motor vehicle licence and registration fees, and salaries; and - payments made for the lease or sub-lease of certain tangible personal property when the payments are made under a written agreement entered into before August 8, 1989. - Expenses you incurred when your partnership was not a GST/HST registrant. - Expenses for which your partnership paid you an allowance that is not reported in Area C of Form GST370, Employee and Partner GST/HST Rebate Application. See the section called "Allowances" on this page for more information. - Expenses of a partner that relate to the supply of exempt goods or services. If you are a member of a partnership that sells exempt goods or services as well as taxable goods or services, subtract the amount of expenses relating to the exempt sales from the total expenses. The amount of expenses relating to supplies of exempt goods or services may be calculated on a percentage basis (for example, by estimating the percentage of the expenses that relate to exempt goods or services) or by specifically identifying those expenses that relate to exempt goods or services supplied by the partnership. - Any personal-use portion of an eligible expense. - 50% of the GST/HST paid on eligible expenses for food, beverages, and entertainment. - An eligible expense, or part of an eligible expense, for which you received, or are entitled to receive, a reimbursement from your partnership. Capital cost allowance (CCA) on motor vehicles, musical instruments, and aircraft You can claim a rebate of the GST/HST you paid on the acquisition of a motor vehicle, musical instrument, or aircraft, based on the amount of CCA you deducted on that property for a taxation year. If you deduct CCA on more than one property of the same class, you have to calculate the portion of CCA that relates to the property that qualifies for a rebate. For example, you would not have paid GST/HST on motor vehicles, musical instruments, and aircraft acquired before 1991. Therefore, you cannot claim a rebate on the CCA for these properties since you did not pay GST/HST on them. If at the time you bought your motor vehicle, musical instrument, or aircraft, you paid 7% GST, you can claim a rebate of 7 divided by 107 of the amount of CCA you deducted on your income tax return. However, if at the time you bought the property, you paid 15% HST, you can claim a rebate of 15 divided by 115 of the amount of CCA you deducted on your income tax return. Note Special rules apply if your partnership paid you an allowance in respect of the property. See the section called "Allowances" on this page for more information. You may also be entitled to a rebate if you purchased your motor vehicle, musical instrument, or aircraft outside a participating province and brought the property into a participating province. An additional calculation may be required in these circumstances. See the section called "Situation 5 - Property and services brought into a participating province" on page 9 for more information. Allowances You cannot claim a GST/HST partner rebate for the GST/HST you paid on expenses for which your partnership paid you a reasonable allowance. If your partnership paid you an unreasonable allowance, you can claim the rebate only if the partnership reports it in Area C of the rebate application. This rule also applies when your partnership pays you an allowance relating to motor vehicles, musical instruments, or aircraft. You cannot claim the rebate based on the CCA you deducted for these properties if the partnership pays you a reasonable allowance. You can claim the rebate only if the partnership pays you an unreasonable allowance and reports it in Area C of the rebate application. A reasonable allowance is not included in your income for income tax purposes. An unreasonable allowance, however, is generally included in your income for income tax purposes. PAGE 6 See the section called "Area C - Declaration by claimant's employer or partnership" on page 9 for more information. General information on filing your rebate application To file your rebate application, complete Form GST370, Employee and Partner GST/HST Rebate Application. You will find a copy of this form in the middle of this guide. If you are claiming a GST/HST rebate for both employee and partner expenses, use only one application form and combine your expenses. Filing deadline You should file your rebate application with your income tax return for the year in which you deduct the corresponding expenses for income tax purposes. However, if you file your rebate application separately from your income tax return, send it along with a letter to your tax centre. Include details such as your social insurance number and the taxation year to which the rebate application relates. If you do not file your rebate application when you file your income tax return, you have up to four years from the end of the year to which the expenses relate to file an application. We use the calendar year in which you take your income tax deduction to calculate the filing deadline. For example, if you incur an eligible expense and deduct it from your share of the partnership income in the 2002 taxation year, you have until December 31, 2006, to file the GST/HST rebate application relating to that expense. Rebate restriction You can only file one GST/HST rebate application for each calendar year. You cannot receive a rebate of an amount if: - the amount was previously rebated, credited, refunded, or remitted to you; - you are entitled to obtain a rebate, refund, or remission of the amount; - you received a credit note, or you issued a debit note, for an adjustment, refund or credit that includes the amount; or - the deadline for filing the rebate has passed. Overpayment of a rebate If you receive an overpayment of a GST/HST rebate, you have to repay the excess. We charge interest on any balance you owe. How a rebate affects your income tax If you receive a GST/HST partner rebate, you have to include it in your income for the taxation year in which you receive it. For example, if in 2003 you receive a GST/HST rebate relating to the 2002 taxation year, you have to include the amount of the rebate in your income for 2003. Report the amount of the rebate you receive that relates to eligible expenses, other than capital cost allowance (CCA), on line 104 of your income tax return. If any part of the rebate relates to the CCA deduction for a motor vehicle, musical instrument, or aircraft, you have to reduce the undepreciated capital cost (UCC) of the related property by that part of the rebate. Example In 2003, Myriam, who is a partner in a partnership, received an $85.00 GST/HST partner rebate. Of the rebate, $56.28 relates to a CCA deduction for her motor vehicle. At the end of 2002, the UCC for her vehicle was $21,652. Her UCC for the beginning of 2003 will be $21,595.72 ($21,652 minus $56.28). The remaining $28.72 ($85.00 minus $56.28) will be reported as income on line 104 of her 2003 income tax return. Keeping records You have to keep adequate books and records to support your claim for a GST/HST rebate. Generally, these are the same records you need to support your deductions for income tax purposes. They include receipts, invoices, credit card statements, cancelled cheques, and written agreements. The records to support your claim should contain the information we need to determine the GST/HST you paid on each purchase you made (for example, they should provide the amount of GST/HST you paid, or indicate the amount you paid included GST/HST). A person who sells taxable goods and services to you and charges you GST/HST has to provide, when you request it, enough information to allow you to support your GST/HST rebate claim. You do not have to send us these records with your GST/HST rebate application. However, you have to keep them for six years after the end of the year to which they relate, in case we ask to see them. How to complete your rebate application You have to complete areas A, B, and D of Form GST370, Employee and Partner GST/HST Rebate Application. If applicable, an authorized officer of your partnership has to complete Area C (see page 9 for information on when Area C is applicable). Use a separate application form for each taxation year. PAGE 7 Area A - Identification The "Taxation year of claim" should be the same year as the income tax return for which you are claiming the GST/HST rebate. You can only file one rebate application per calendar year. Area B - Rebate calculation Calculate your rebate based on the expenses you deducted from your share of the partnership income on your income tax return. These expenses include GST/HST, provincial sales tax, and tips (if the tips are included in your bill and you paid GST/HST on them). You can claim a rebate of 7 divided by 107 of the eligible expenses on which you paid 7% GST and a rebate of 15 divided by 115 of the eligible expenses on which you paid 15% HST. You may also be entitled to a rebate if you purchased property and services outside a participating province and brought them into a participating province. You may have to do an additional calculation in these circumstances. For more information, read the section called "Situation 5 - Property and services brought into a participating province" on page 9. Refer to the following situations to determine how to calculate your rebate. For purposes of your rebate calculation, use only the expenses you deducted on your income tax return. Situation 1 - The only expenses you deducted for income tax purposes are union, professional, or similar dues If these dues are the only expenses you deducted on line 212 of your income tax return, enter the amount of the dues, on which you paid GST/HST, directly into Area B on the front of Form GST370. Do not complete charts 1 and 2 on the back of the form. Your receipt for these dues should indicate if GST/HST was charged. If the dues were not subject to GST/HST, you are not entitled to a GST/HST rebate. If you paid 7% GST, enter the amount of the dues less any reimbursement you received, or are entitled to receive, directly on lines 1 and 3 of Area B on the front of Form GST370. Multiply the amount of line 3 by 7 divided by 107 and enter the result on line 4. If you paid 15% HST, enter the amount of the dues less any reimbursement you received, or are entitled to receive, directly on lines 5 and 7 of Area B on the front of Form GST370. Multiply the amount of line 7 by 15 divided by 115 and enter the result on line 8. Add lines 4 and 8 and enter the result on line 13. The amount on line 13 is your total rebate claim. Enter this amount on line 457 of your income tax return. Do not forget to sign and date your rebate application in Area D. Situation 2 - You deducted only 7% GST expenses on your income tax return Before completing Area B on the front of Form GST370, complete Chart 1 on the back of the form to determine your total expenses eligible for the GST rebate. Do not complete Chart 2, since you did not pay 15% HST on any of your expenses. Enter in column 1 of Chart 1 the total expenses you incurred while you were a member of the partnership, but that you did not include in your partnership's net income or loss calculations. You calculated these expenses on the following forms or other documents that you file with your income tax return: Form T2032, Statement of Professional Activities; Form T2124, Statement of Business Activities; Form T2042, Statement of Farming Activities; Form T1163, Statement A - NISA Account Information and Statement of Farming Activities for Individuals; Form T2121, Statement of Fishing Activities; and Form T776, Statement of Real Estate Rentals. Also, if applicable, enter the amount of union, professional, or similar dues that you deducted on line 212 of your income tax return, and on which you paid 7% GST, in column 1 of Chart 1. Your receipt for these dues should indicate if GST was charged. If the dues were not subject to GST/HST, you are not entitled to a GST/HST rebate. Do not enter any amounts in the black areas of Chart 1, as these expenses are not subject to GST and, therefore, are not eligible for the rebate. Enter in column 2, the portion of any expenses included in column 1 that is not eligible for the rebate. You will find a list of non-eligible expenses on page 5. For each expense, subtract the amount in column 2 from the amount in column 1 and enter the result in column 3. Total the "Expenses other than CCA" in column 3 and enter the result in box A of column 3. If you deducted CCA for a motor vehicle, musical instrument, or aircraft on which you paid 7% GST, enter in column 1, below "Total eligible expenses other than CCA," the total CCA you deducted. Subtract any non-eligible CCA in column 2 from your total in column 1 and enter the result in box B of column 3. For more information on CCA, read the section called "Capital cost allowance (CCA) on motor vehicles, musical instruments, and aircraft" on page 5. Copy the amounts from boxes A and B of Chart 1 to lines 1 and 2, respectively, of Area B on the front of the rebate application. Add lines 1 and 2 in Area B and enter the result on line 3. Multiply line 3 by 7 divided by 107 and enter the result on line 4. If Situation 5, described on page 9, does not apply to you, copy the amount from line 4 to line 13. This is your total rebate claim. Enter this amount on line 457 of your income tax return. Do not forget to sign and date your rebate application in Area D. Situation 3 - You deducted only 15% HST expenses on your income tax return Before completing Area B on the front of Form GST370, complete Chart 2 on the back of the form to determine PAGE 8 your total expenses eligible for the HST rebate. Do not complete Chart 1, since you did not pay 7% GST on any of your expenses. Enter in column 1 of Chart 2 the total expenses you incurred while you were a member of the partnership, but that you did not include in your partnership's net income or loss calculations. You calculated these expenses on the following forms or other documents that you file with your income tax return: Form T2032, Statement of Professional Activities; Form T2124, Statement of Business Activities; Form T2042, Statement of Farming Activities; Form T1163, Statement A - NISA Account Information and Statement of Farming Activities for Individuals; Form T2121, Statement of Fishing Activities; and Form T776, Statement of Real Estate Rentals. Also, if applicable, enter the amount of union, professional, or similar dues that you deducted on line 212 of your income tax return, and on which you paid 15% HST, in column 1 of Chart 2. Your receipt for these dues should indicate if HST was charged. If the dues were not subject to GST/HST, you are not entitled to a GST/HST rebate. Do not enter any amounts in the black areas of Chart 2, as these expenses are not subject to the HST and, therefore, are not eligible for the rebate. Enter in column 2, the portion of any expenses included in column 1 that is not eligible for the rebate. You will find a list of non-eligible expenses on page 5. For each expense, subtract the amount in column 2 from the amount in column 1 and enter the result in column 3. Total the "Expenses other than CCA" in column 3 and enter the result in box C of column 3. If you deducted CCA for a motor vehicle, musical instrument, or aircraft on which you paid 15% HST, enter in column 1, below "Total eligible expenses other than CCA," the total CCA you deducted. Subtract any non-eligible CCA in column 2 from your total in column 1 and enter the result in box D of column 3. For more information on CCA, read the section called "Capital cost allowance (CCA) on motor vehicles, musical instruments, and aircraft" on page 5. Copy the amounts from boxes C and D of Chart 2 to lines 5 and 6, respectively, of Area B on the front of the rebate application. Add lines 5 and 6 of Area B and enter the result on line 7. Multiply line 7 by 15 divided by 115 and enter the result on line 8. If Situation 5, described on page 9, does not apply to you, copy the amount from line 8 to line 13. This is your total rebate claim. Enter this amount on line 457 of your income tax return. Do not forget to sign and date your rebate application in Area D. Situation 4 - You deducted both 7% GST and 15% HST expenses on your income tax return Before completing Area B on the front of Form GST370, complete Chart 1 and Chart 2 on the back of the form to determine the total expenses eligible for the GST/HST rebate. Use Chart 1 to calculate the total eligible expenses on which you paid 7% GST and Chart 2 to calculate the total eligible expenses on which you paid 15% HST. Enter in column 1 of Chart 1 and Chart 2, respectively, the 7% GST expenses and the 15% HST expenses you incurred while you were a member of the partnership, but that you did not include in your partnership's net income or loss calculations. You calculated these expenses on the following forms, or other documents that you file with your income tax return: Form T2032, Statement of Professional Activities; Form T2124, Statement of Business Activities; Form T2042, Statement of Farming Activities; Form T1163, Statement A - NISA Account Information and Statement of Farming Activities for Individuals; Form T2121, Statement of Fishing Activities; and Form T776, Statement of Real Estate Rentals. Also, if applicable, enter the amount of union, professional, or similar dues that you deducted on line 212 of your income tax return, and on which you paid 7% GST or 15% HST, in column 1 of Chart 1 and Chart 2, respectively. Your receipt for these dues should indicate if GST or HST was charged. If the dues were not subject to GST/HST, you are not entitled to a GST/HST rebate. Do not enter any amounts in the black areas, as these expenses are not subject to GST/HST and, therefore, are not eligible for the rebate. Enter in column 2 of each chart, the portion of any expenses included in column 1 that is not eligible for the rebate. You will find a list of non- eligible expenses on page 5. For each expense, subtract the amount in column 2 from the amount in column 1 and enter the result in column 3. Total the "Expenses other than CCA" in column 3 and enter the result in boxes A and C in column 3 of charts 1 and 2, respectively. If you deducted CCA for a motor vehicle, musical instrument, or aircraft, enter in column 1, below "Total eligible expenses other than CCA," the total CCA you deducted. Subtract any non-eligible CCA in column 2 from your total in column 1 and enter the result in boxes B and D in column 3 of charts 1 and 2, respectively. For more information on CCA, read the section called "Capital cost allowance (CCA) on motor vehicles, musical instruments, and aircraft" on page 5. Copy the amounts from boxes A and B of Chart 1 to lines 1 and 2, respectively, of Area B on the front of the rebate application. Copy the amounts from boxes C and D of Chart 2 to lines 5 and 6, respectively, of Area B. Add lines 1 and 2 of Area B and enter the result on line 3. Multiply the amount on line 3 by 7 divided by 107 and enter the PAGE 9 result on line 4. Add lines 5 and 6 of Area B and enter the result on line 7. Multiply the amount on line 7 by 15 divided by 115 and enter the result on line 8. If Situation 5, described below, does not apply to you, add lines 4 and 8 and enter the result on line 13. This is your total rebate claim. Enter this amount on line 457 of your income tax return. Do not forget to sign and date your rebate application in Area D. Situation 5 - Property and services brought into a participating province You may be able to claim a rebate of 8 divided by 108 of eligible expenses (discussed on page 4) on which you paid the 8% provincial part of the HST separately, and which you deducted from your share of the partnership income on your income tax return. This excludes any expenses for which you paid 15% HST. You may have paid the 8% provincial part of the HST separately in situations where: - you purchased goods in a non-participating province and brought them into a participating province; - you imported commercial goods into a participating province from outside Canada; and - you had goods delivered or made available to you in a participating province, or sent by mail or courier to you at an address in a participating province from a non-registered non-resident of Canada. If you were not a GST/HST registrant, and one of the situations above applies, you had to pay the 8% provincial part of the HST by filing Form GST489, Return for Self-Assessment of the Provincial Part of Harmonized Sales Tax (HST). In the case of a motor vehicle, you may have paid the 8% provincial part of HST separately in situations where: - you paid 7% GST when you purchased the vehicle from a registrant in a non- participating province and brought the vehicle into a participating province; or - you purchased your vehicle from someone who was outside Canada and we collected 7% GST at the border. The 8% provincial part of HST was payable when you registered your vehicle at a provincial motor vehicle registry office in a participating province. Note If you did not pay GST/HST when you purchased the vehicle, you may have paid a 15% provincial motor vehicle tax when you registered your vehicle in a participating province after April 1, 1997. The 15% provincial motor vehicle tax is imposed and administered by provincial governments and is separate from the GST/HST. Since it is not a federal tax, it is not eligible for any GST/HST rebate. For more information on property and services brought into participating provinces, see the guide called General Information for GST/HST Registrants or Form GST489, Return for Self-Assessment of the Provincial Part of Harmonized Sales Tax (HST). Enter, directly on line 9 of Area B on the front of Form GST370, the total amount of the expenses you deducted on your income tax return (excluding CCA and the non-eligible portion of the expenses, if applicable). You will find a list of non-eligible expenses on page 5. If you deducted CCA on your income tax return for a motor vehicle, musical instrument, or aircraft (on which you paid the 8% provincial part of HST separately), enter the amount of the CCA, minus the portion that is not eligible for the rebate, directly on line 10 of Area B. You will find a list of non-eligible expenses on page 5. For more information on CCA, read the section called "Capital cost allowance (CCA) on motor vehicles, musical instruments, and aircraft" on page 5. Add lines 9 and 10 and enter the result on line 11. Multiply line 11 by 8 divided by 108 and enter the result on line 12. Add any amounts you have on lines 4, 8, and 12, and enter the result on line 13. This is your total rebate claim. Enter this amount on line 457 of your income tax return. Do not forget to sign and date your rebate application in Area D. Area C - Declaration by claimant's employer or partnership You may want to claim a rebate for expenses for which you received an unreasonable allowance (discussed in the section called "Allowances" on page 5). If so, an authorized officer of your partnership has to complete Area C of the rebate application. An authorized officer includes an immediate supervisor, controller, office manager, or another partner. If Area C is not completed, you cannot claim a rebate for the GST/HST you paid on the expenses. Note When the partnership completes Area C, it is certifying that it did not consider the allowance to have been reasonable for purposes of subparagraphs 6(1)(b)(v), (vi), (vii), or (vii.1) of the Income Tax Act at the time it was paid and that it will not include an amount in respect of the allowance in determining its input tax credits or rebates. Area D - Certification Sign the certification area. If you do not, it may delay or invalidate your GST/HST rebate claim. After completing your rebate application After completing Form GST370, Employee and Partner GST/HST Rebate Application, attach a copy to your income tax return and enter the amount of your claim on line 457 of your income tax return. Keep a copy of the completed form for your records. PAGE 10 Examples This section provides some questions and answers, as well as an example, to help you understand how to calculate the rebate. Question: For the 2002 taxation year, I incurred eligible automobile leasing expenses of $5,500. My partnership paid me a reasonable motor vehicle allowance of $3,100 for the use of my automobile. Can I claim a GST/HST rebate for the leasing costs? Answer: Since you received a reasonable allowance for your automobile, you cannot claim a GST/HST rebate for the leasing cost. In addition, you cannot claim the rebate for any other automobile expenses you incurred, including gasoline and repairs. Question: I am a member of a partnership that is a GST/HST registrant, and I have incurred total expenses of $1,070 (including GST) for which I was not reimbursed or paid an allowance. For the last fiscal year, ending in 2002, the partnership was involved in commercial activities 60% of the time. The partnership spent the remaining 40% of the time providing exempt goods and services. Can I claim the rebate on all my expenses? Answer: You can only claim the GST/HST rebate on the portion of expenses that relates to commercial activities. Since your partnership was involved 40% of the time in providing exempt goods and services, you have to enter a total of $428 ($1,070 multiplied by 40%) in column 2 of Chart 1 on the back of Form GST370. This amount represents the non-eligible portion of your expenses as a member of a partnership. Example Ian is a partner of the partnership called ABC Contracting. The partnership is registered for GST/HST and has a December 31 year end. Under the partnership agreement, Ian is required to personally pay his motor vehicle expenses. For 2002, Ian did not receive any allowance or reimbursement for these expenses. All of his expenses were incurred in Ontario. For 2002, Ian's motor vehicle expenses were as follows: Expenses: Licence and registration fees $260 Fuel $3,230 Insurance $750 Interest expenses $1,500 Maintenance and repairs $467 Car washes $84 Capital cost allowance (CCA) $6,120 Total car expenses $12,411 Kilometres driven to earn his share of partnership income 25,000 Personal kilometres driven 5,000 Total kilometres driven 30,000 Ian is now ready to calculate his GST/HST rebate. To claim the rebate, he has to complete Form GST370, Employee and Partner GST/HST Rebate Application. Before Ian can complete Area B, he has to complete Chart 1 on the back of Form GST370 to calculate his 7% GST eligible expenses. Since he did not pay HST on any of his expenses, he does not complete Chart 2. Using the information in this guide, he calculates and reports the expenses not eligible for the rebate in column 2. To calculate the personal-use portion of his motor vehicle expenses, Ian uses the fraction 5,000 divided by 30,000, which represents the personal-use kilometres driven (30,000 minus 25,000) divided by the total kilometres driven (30,000). PAGE 11 He completes Chart 1 as follows: +++ Chart 1 - Eligible expenses on which you paid 7% GST Type of expenses Expenses other than CCA Motor vehicle expenses Fuel Column (1): Total expenses 3,230.00 Column (2): Non-eligible portion of expenses 538.33* Column (3): Eligible expenses (column 1 minus column 2) 2,691.67 Maintenance and repairs Column (1): Total expenses 467.00 Column (2): Non-eligible portion of expenses 77.83** Column (3): Eligible expenses (column 1 minus column 2) 389.17 Insurance, licence, registration, and interest (black area) Leasing Column (1): Total expenses ^ Column (2): Non-eligible portion of expenses ^ Column (3): Eligible expenses (column 1 minus column 2) ^ Other expenses (please specify) Washes Column (1): Total expenses 84.00 Column (2): Non-eligible portion of expenses 14.00*** Column (3): Eligible expenses (column 1 minus column 2) 70.00 Line (A): Total eligible expenses other than CCA (Column 3) Column (3): Eligible expenses (column 1 minus column 2) (add all entries) 3,150.84 Line B: Capital cost allowance (CCA) on motor vehicles, musical instruments, and aircraft (add all entries for each of the following columns) Column (1): Total expenses 6,120.00 Column (2): Non-eligible portion of expenses 1,020.00**** Column (3): Eligible expenses (column 1 minus column 2) 5,100.00 +++ * $3,230 multiplied by 5,000 divided by 30,000 = $538.33 ** $467 multiplied by 5,000 divided by 30,000 = $77.83 *** $84 multiplied by 5,000 divided by 30,000 = $14.00 **** $6,120 multiplied by 5,000 divided by 30,000 = $1,020.00 Ian did not enter any amounts in the black areas of the chart, as these expenses were not subject to GST, and are therefore not eligible for the rebate. PAGE 12 Ian copies the amounts from boxes A and B of Chart 1 to lines 1 and 2 in Area B on the front of Form GST370, and completes it as follows: +++ Area B - Rebate calculation (to be completed by claimant) GST rebate for eligible expenses on which you paid 7% GST Line 1: Eligible expenses other than CCA, on which you paid 7% GST (from box A of Chart 1 on the back of this form, or, enter the amount of union, professional, or similar dues or apprentice mechanic tools eligible for the GST rebate) 3,150.84 Line 2: Eligible CCA on motor vehicles, musical instruments, and aircraft for which you paid 7% GST (from box B of Chart 1 on the back of this form) 5,100.00 Line 3 and line 6485: Total expenses eligible for the GST rebate (line 1 plus line 2) 8,250.84 Line 4: Multiply line 3 by 7 divided by 107 539.77 HST rebate for eligible expenses on which you paid 15% HST Line 5: Eligible expenses other than CCA, on which you paid 15% HST (from box C of Chart 2 on the back of this form, or, enter the amount of union, professional, or similar dues or apprentice mechanic tools eligible for the HST rebate) ^ Line 6: Eligible CCA on motor vehicles, musical instruments, and aircraft for which you paid 15% HST (from box D of Chart 2 on the back of this form) ^ Line 7 and line 6487: Total expenses eligible for the HST rebate (line 5 plus line 6) ^ Line 8: Multiply line 7 by 15 divided by 115 ^ Rebate for property and services brought into a participating province (meaning, Nova Scotia, New Brunswick, Newfoundland and Labrador) Do not include any expenses for which you paid 15% HST. Read Situation 5 of the applicable guide for more details. Line 9: Eligible expenses other than CCA, on which you paid the provincial part of HST separately ^ Line 10: Eligible CCA on motor vehicles, musical instruments, and aircraft for which you paid the provincial part of HST separately ^ Line 11 and line 6486: Total expenses eligible for the rebate (line 9 plus line 10) ^ Line 12: Multiply line 11 by 8 divided by 108 ^ Line 13: Employee and Partner GST/HST Rebate (add lines 4, 8, and 12) 539.77 Enter the amount from line 13 on line 457 of your income tax return. +++ Ian does not have to complete Area C of Form GST370 as he did not receive an allowance for the use of his motor vehicle. Ian enters $539.77 on line 457 of his 2002 income tax return. He also attaches Form GST370 to his income tax return and keeps a copy for his records. On his 2003 income tax return, Ian will include $206.13 ($3,150.84 multiplied by 7 divided by 107) on line 104. This amount is the part of the rebate he will receive in 2003 that relates to eligible expenses other than CCA. He will then reduce his undepreciated capital cost (UCC) for the beginning of 2003 by $333.64 ($5,100 multiplied by 7 divided by 107). Your opinion counts! We review our publications each year. If you have any comments or suggestions to help us improve them, we would like to hear from you. Please send your comments to: Client Services Directorate Canada Customs and Revenue Agency Lancaster Road Ottawa ON K1A 0L5 +++ GST 370 E (02) Front Canada Customs and Revenue Agency EMPLOYEE AND PARTNER GST/HST REBATE APPLICATION You do not qualify for this rebate if your employer is a listed financial institution (for example, a person that was, at any time during the year, a bank, an investment dealer, a trust company, an insurance company, a credit union, or a corporation whose principal business is lending money). For details on how to complete this form, see the guides called Employment Expenses (for employees) and GST/HST Rebate for Partners (for members of a partnership). Area A - Identification (to be completed by claimant) Last name ^ First name and initials ^ Taxation year of claim (one year per claim) ^ Social insurance number ^ Name of employer or partnership (must be a GST/HST registrant) ^ Business Number of employer or partnership ^ Area B - Rebate calculation (to be completed by claimant) GST rebate for eligible expenses on which you paid 7% GST Line 1: Eligible expenses, other than CCA, on which you paid 7% GST (from box A of Chart 1 on the back of this form, or, enter the amount of union, professional, or similar dues or apprentice mechanic tools eligible for the GST rebate) ^ Line 2: Eligible CCA on motor vehicles, musical instruments, and aircraft for which you paid 7% GST (from box B of Chart 1 on the back of this form) ^ Line 3 and line 6485: Total expenses eligible for the GST rebate (line 1 plus line 2) ^ Line 4: Multiply line 3 by 7 divided by 107 ^ HST rebate for eligible expenses on which you paid 15% HST Line 5: Eligible expenses, other than CCA, on which you paid 15% HST (from box C of Chart 2 on the back of this form, or, enter the amount of union, professional, or similar dues or apprentice mechanic tools eligible for the HST rebate) ^ Line 6: Eligible CCA on motor vehicles, musical instruments, and aircraft for which you paid 15% HST (from box D of Chart 2 on the back of this form) ^ Line 7 and line 6487: Total expenses eligible for the HST rebate (line 5 plus line 6) ^ Line 8: Multiply line 7 by 15 divided by 115 ^ Rebate for property and services brought into a participating province (i.e., Nova Scotia, New Brunswick, Newfoundland and Labrador) Do not include any expenses for which you paid 15% HST. Read Situation 5 of the applicable guide for more details. Line 9: Eligible expenses, other than CCA, on which you paid the provincial part of HST separately ^ Line 10: Eligible CCA on motor vehicles, musical instruments, and aircraft for which you paid the provincial part of HST separately ^ Line 11 and line 6486: Total expenses eligible for the rebate (line 9 plus line 10) ^ Line 12: Multiply line 11 by 8 divided by 108 ^ Line 13: Employee and partner GST/HST rebate (add lines 4, 8, and 12) ^ Enter the amount from line 13 on line 457 of your income tax return. Area C - Declaration by claimant's employer or partnership (an authorized officer of your employer or partnership must complete this area only if you are claiming a rebate for any expenses included on lines 4, 8, or 12 in Area B above, for which you were paid a taxable allowance, i.e., a non-reasonable allowance). I certify that for the tax year stated above, the claimant was paid the following allowance, which at the time it was paid, I did not consider to be reasonable for the purposes of subparagraphs 6(1)(b)(v), (vi), (vii), or (vii.1) of the Income Tax Act . I will not include an amount in respect of this allowance in determining my input tax credit or rebate. Amount received $ ^ Reason for allowance(s) (list activities) ^ Name of employer or partnership ^ Signature of employer or authorized officer ^ Position of authorized officer ^ (Year/Month/Day) ^ Area D - Certification (to be completed by claimant) I certify that the information in this document is, to the best of my knowledge, true, correct, and complete and that I am eligible for the Employee and partner GST/HST rebate for the taxation year stated above. Signature ^ (Year/Month/Day) ^ Privacy Act Personal Information, Bank number RCC/P-PU-080. GST 370 E (02) Back Chart 1 - Eligible expenses on which you paid 7% GST Do not enter amounts in the black areas, as these expenses are not subject to GST/HST and, therefore, are not eligible for the rebate. Type of expenses *** Transcriber's Note: In Charts 1 and 2 the black areas will be identified as (black area). *** Expenses other than CCA Accounting and legal fees Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Advertising and promotion Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Food, beverages, and entertainment Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Lodging Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Parking Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Supplies Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Other expenses (please specify) Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Apprentice mechanic tools expenses (for employees) Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Musical instrument expenses other than CCA Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Artists' employment expenses Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Union, professional, or similar dues Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Motor vehicle expenses Fuel Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Maintenance and repairs Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Insurance, licence, registration, and interest (black area) Leasing Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Other expenses (please specify) Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Work space in home Electricity, heat, and water Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Maintenance Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Insurance and property taxes (black area) Other expenses (please specify) Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Line (A) Total eligible expenses other than CCA (column 3) Column (3) Eligible expenses (column 1 minus column 2) (add all entries) ^ Line B Capital cost allowance (CCA) on motor vehicles, musical instruments, and aircraft (add all entries for each of the following columns) Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Chart 2 - Eligible expenses on which you paid 15% HST Expenses other than CCA Type of expenses Accounting and legal fees Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Advertising and promotion Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Food, beverages, and entertainment Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Lodging Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Parking Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Supplies Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Other expenses (please specify) Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Apprentice mechanic tools expenses (for employees) Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Musical instrument expenses other than CCA Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Artists' employment expenses Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Union, professional, or similar dues Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Motor vehicle expenses Fuel Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Maintenance and repairs Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Insurance, licence, registration, and interest (black area) Leasing Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Other expenses (please specify) Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Work space in home Electricity, heat, and water Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Maintenance Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Insurance and property taxes (black area) Other expenses (please specify) Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ Line (C) Total eligible expenses other than CCA (Column 3) Column (3) Eligible expenses (column 1 minus column 2) (add all entries) ^ Line (D) Capital cost allowance (CCA) on motor vehicles, musical instruments, and aircraft (add all entries for each of the following columns) Column (1) Total expenses ^ Column (2) Non-eligible portion of expenses ^ Column (3) Eligible expenses (column 1 minus column 2) ^ +++