Since the introduction of HST in Ontario on July 1, 2010, large businesses were required to report Recaptured Input Tax Credits ("RITCs") in respect of specified property and services (energy, telecommunication services, meals and entertainment, motor vehicles and fuel) on their GST/HST returns.
The RITCs are deducted from the ITCs that are claimed in respect of the acquisition of a specified property or service, reducing the total recovery of GST/HST.
Since July 1, 2015, the RITC restriction is being phased out over a three year period, as follows:
| Period | Recapture Rate – Ontario |
| July 1, 2010 to June 30, 2015 | 100% |
| July 1, 2015 to June 30, 2016 | 75% |
| July 1, 2016 to June 30, 2017 | 50% |
| July 1, 2017 to June 30, 2018 | 25% |
| On or after July 1, 2018 | 0% |
The current RITC rate of 50% used to determine the amount of RITCs will be reduced from 50% to 25% effective on July 1, 2017.
Affected businesses will be required to report the RITCs using the new effective rate in regard to HST that became payable on or after July 1, 2017 when completing Schedule B of their GST/HST Netfile returns. Consequently, for any reporting period that straddles July 1, large businesses may have to use more than one RITC rate to account for the RITC rates in effect before and after July 1.
Additional information is available in the GST/HST Info-Sheet GI-171 available on the Canada Revenue Agency website here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
