Canada: Recapture input tax credit, Ontario

Canada: Recapture input tax credit, Ontario

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.

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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 

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