This information only applies to Independent Consultants.
If you’re an Independent Consultant – you have a separate incorporated business, and you invoice Ian Martin regularly through your business. If you’re a Contract Employee (T4 or W-2) – please skip this article.
Like invoicing for hours, you need to submit both an expense form to the client company for approval, and a business-to-business invoice to Ian Martin for expenses that your business incurred. We match the two up and deposit to your business account.
Why you need to include pre-tax amounts on your expense form
- As a GST- or HST-registered company, you can claim the tax paid on expenses as an Input Tax Credit (“ITC” – see more here).
- Ian Martin can’t claim the ITC for your company, and we can’t pass the taxes on to the client company – your business needs to claim them
- You can’t claim the tax twice (once through your business and again through Ian Martin) – you add the GST/HST for expenses only on the total of your invoice.
How to include pre-tax amounts on your expense form
If your itemized receipt has the subtotal on it (e.g., a restaurant receipt, a store purchase):
- You need to attach or upload the itemized receipt (not the just credit or debit slip) to your expense form for approval.
- Most itemized receipts include the subtotal before tax; that is the amount you’ll enter on your expense form.
- If there was a tip on a meal, add the tip to the subtotal –
- example: the subtotal on the meal receipt is $44.75. The tip is $9.10 – on the expense form add both together and enter $53.85 as the expense for that meal.
If your itemized receipt does not have the subtotal on it (e.g., a taxi receipt, a parking receipt)
- To back out the tax manually, divide the amount by “1 plus the tax rate” – e.g.,
- for HST Ontario (13%), divide the total by 1.13
- for GST Alberta (5%), divide the total by 1.05, etc.
- You can also find reverse sales tax calculators online like this one here.
