Tax Planning for You and Your Family 2019 by KPMG. p 198.


Michelle buys a new car in Ontario in July 2013 for $35,000 plus 13% HST. She is required to drive 10,000 km for employment-related purposes during the year. She also drives 10,000 km on personal trips.

Since half of her driving is employment-related, Michelle can claim half of the capital cost allowance normally allowed for a car. Although she spent $35,000, the cost is capped at $30,000, plus $3,900 HST (total of $33,900), for tax purposes. The maximum capital cost allowance for the year of acquisition is 15%. Fifteen percent of $33,900 is $5,085. Michelle can therefore claim half of this amount, $2,543, as a deduction against her employment income for 2013.

Further, because she uses her car partly for business, Michelle can claim an HST rebate for 2013 from the CRA equal to 13/113 of her capital cost allowance claim—see 12.3.2.

p 201

Finally, note also that the 13/113 rebate rate is only used in provinces that impose HST at the 13% rate (i.e., Ontario, New Brunswick and Newfoundland and Labrador). Had Michelle’s expenses been incurred in a province with 5% GST only or in Nova Scotia (15% HST) or British Columbia (12% HST until April 1, 2013), the rebate she generally would be entitled to claim for 2013 would be calculated accordingly (i.e., at 5/105, 15/115 or 6.75/106.75 respectively of the GST/HST-included price). (GST or HST rebates are also available to members of partnerships—see 11.3.7.) On April 1, 2013, B.C. returned to a GST and provincial sales tax system and Prince Edward Island adopted a 14% HST (see 11.2.5).

I'm unproficient at math. I know 113 = 100 + 13, but I don't know if this relevants?

1 Answer 1


This is a common phenomenon when tax rates are converted between a percentage of net and a percentage of gross. The 13% (13/100) tax rate is based on the net (pre-tax) price. To calculate the tax from the gross (post-tax) price, the pertinent rate is 13/113. Example: Net $100, tax $13, gross $113.

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