Many large companies must prepare their systems for the second phase-out period of the recaptured input tax credit (RITC) rules in Ontario effective 1 July 2016. Various accounts and calculations related to the specified property and services subject to the RITC rules could be affected—including common area maintenance charges and employee expense accounts.
Qualifying large businesses will benefit as the recapture rate decreases to 50% (from 75%) for expenses incurred as of 1 July 2016. However, these businesses still must report 100% gross RITC amounts when they file their electronic GST/HST* returns and allocate the expenses to the appropriate recapture rate (e.g., 75% and 50%). As a result, large businesses must carefully recalculate their RITC amounts if their systems applies the recapture rate to the expense at the time of data entry.
*GST/HST = goods and services tax / harmonized sales tax
Read a June 2016 report [PDF 68 KB] prepared by the KPMG member firm in Canada: Get Systems Ready for Next RITC Phase-Out Period Starting 1 July 2016
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.
KPMG's new digital platform