The HST and Moving Expenses
Rick Taylor May 3, 2016 Resources, Press Release, News
When an employee gets transferred within Canada the corporation can either choose to pay the move directly or simply give the employee a cash amount (i.e lump sum payment) and let them make the arrangements themselves.
One thing that should play a role in what to do is the effect of the HST on this choice.
Household goods can be a significant part of the overall relocation expense. It is not uncommon for a full household moving across the country to have an overall bill of $10,000 to $25,000.
Take for example an employee moving from Vancouver, BC to Toronto, Ontario. With cars, storage etc. lets assume a bill of $20,000. As the move is coming to Ontario the HST of 13% would equate to a cost of $2600.00.
If the employee pays this bill himself this becomes an expense directly held by him.
If the corporation is billed the moving cost, they are able to claim the expense against the HST collections they make through their sales activities in Canada. In effect, this cost comes at ZERO expense to the corporation.
If the corporation moves multiple employee's in a year, the cost savings can often times be in the tens of thousands of dollars.
We would be pleased to discuss this with anyone who wants more information.