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
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