Posted on July 23rd, 2015 by Gregory M. Sawatsky in Commodity Tax (HST), Domestic Tax

HST Recaptured ITC Phase Out

As you may remember, when the Ontario PST and GST were harmonized in 2010, large corporate groups with over $10,000,000 of taxable sales were subject to the recaptured input tax credit (RITC) regime.

For certain large businesses, since harmonization, 100% of the provincial component of the HST has been recaptured on expenses such as M&E, specified energy costs, specified telecommunications and certain vehicle expenses.  As the next recapture period is on the horizon (i.e July 1, 2015 – June 30, 2016), this is a reminder that for this upcoming period, only 75% of the provincial component will now be required to be ‘recaptured’.

The reductions of the recaptured amount will follow as outlined here:

  • 50% recaptured for the period from July 1, 2016 – June 30, 2017
  • 25% recaptured for the period from July 1, 2017 – June 30, 2018
  • 0% recaptured after July 1, 2018

Attached is a link to our article from last year as a reminder of the rules for your reference, http://djb.com/2014/07/ritc-reminder-and-check-up/

For those subject to the RITC regime and with the upcoming recapture period, it may be worth a reminder that only 75% of the 8% component of the HST will be required to be recaptured.

 


About the Author

Gregory M. SawatskyPartner | MAcc, CPA, CA

As a Partner in the tax services area, Greg provides GST/HST, corporate, personal and estate tax services for the Hamilton and Halton regions.
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