[duffmancd]

If anyone is wondering where 2.08 comes from like me. First we consider the case with no GST, where the gross-up multiplier is x1.8868 ($1887). This is the pre-tax earnings at 47% required to get a post-tax benefit of $1000. i.e. $1887 x (1-47%) = $1000. With some algebra and setting the top marginal tax rate to R, and the Gross-up to G: G=1/(1-R). The idea is the Government gets its cut either way, there is no tax benefit (for employees in the highest bracket, and actually a net loss for employees not in that bracket).

If the employer can claim back GST (currently 10%) on the original purchase, the formula for G becomes G=1/(1-R)+(1/11)/R. To account for the extra 10%/110% that the employer can claim back.