Tax Compliance

As a not-for-profit, charitable organization, Toronto Metropolitan University (TMU) is exempt from paying income tax. However, there are activities that may be subject to withholdings and other taxes.

Income tax withholding and remittance

As an employer, TMU is required to withhold and remit income tax at source on payments made to university employees. These deductions apply to payroll and any other taxable amounts paid to employees.

Harmonized sales tax

The 13 per cent harmonized sales tax (HST) is a combination of:

• the 5 per cent Goods and Services Tax (GST)
• the 8 per cent Ontario Provincial Sales Tax (PST)

HST applies in two instances at TMU - during purchase and payment to vendors and during external sales.

Tax on purchases and payments to vendors

Purchases and payments to vendors include those made to individuals such as non-employee independent contractors or sole proprietors and businesses for goods and services procured by TMU for its operations.

HST applies to the majority of goods and services purchased by the university. For more guidance on what purchases are taxable and at what rate, visit the Canada Revenue Agency’s page on GST/HST (external link) .

Public service bodies’ (PSB) rebates

As a public service body, TMU receives rebates on the federal and provincial components of the HST paid on its purchases. When you make purchases on behalf of TMU, the non-recoverable portion of the HST will be charged to your department's cost centre.

In most instances, vendors should be charging the university 13% HST as the goods and services are consumed in Ontario, except for exempt and zero-rated supplies. The following shows the general PSB rebate applicable for most TMU purchases:

• Federal rebate of 1.65% calculated as 5% x (1-0.67); plus
• Provincial rebate of 1.76% calculated as 8% x (1-0.78).

Example:

TMU purchases equipment and furniture used in Ontario for:

• Invoice amount: $100.00 
• HST: $13.00 
• Total invoice: $113.00

PSB rebate calculation tables

Input tax credit (ITC)

TMU is also entitled to claim input tax credits on expenditures related to certain non-core activities (i.e. unrelated to academics or research activities). 

As an example, for HST paid on goods or services used in non-core activities, TMU is entitled to receive ITC up to 100% of the HST.

In certain cases, a department may engage in both core and non-core university activities. In these situations a blended rate will apply. In general, HST on most departmental activities should be subject to the PSB rebate rate.

Self-assessment  

All TMU departments are required to self-assess HST on imported goods and services that are not exempt or considered zero-rated supplies. 

Tax on external sales

In general, most services provided by the university to external parties are considered exempt and are not subject to HST. However, there may be instances where a sale is subject to tax, especially in non-core ancillary operations.

To determine if a sale to an external customer is subject to HST, GST or PST, please contact your financial advisor.

Questions?

If you have any questions, please contact your financial advisor.