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 meals & entertainment, specified energy costs, specified telecommunications, and certain vehicle expenses. As the next recapture period is on the horizon (July 1, 2017 – June 30, 2018), this is a reminder that for this upcoming period, only 25% (down from 50% in the prior period) of the provincial component will now be required to be ‘recaptured’.
There are no more remaining reductions to be recaptured after July 1, 2018; so starting next year, large businesses will finally be able to claim the full HST paid as an ITC.
Click here for a link to our previous article, as a reminder of the rules for your reference.
Article written by: Greg Sawatsky, MAcc, CPA, CA