Ontario’s HST Recapture Rate Declines on July 1, 2017

June 29, 2017


On July 1, 2017, Ontario’s HST recapture rate will decline from 50% to 25%, as part of the three year phase out plan of recaptured input tax credits (RITCs). This means that businesses that are required to recapture input tax credits may need to update calculations related to specified property and services within their accounting systems, including expense report modules. Keep in mind that he reduced recapture rate will apply to Ontario HST that is paid or payable from July 1, 2017 to June 30, 2018.

Since the introduction of HST in Ontario, certain large businesses (generally those that exceed $10 million in taxable supplies, including supplies of associated companies) have been required to recapture the provincial portion of Ontario HST on specified property and services, which includes electricity, telecommunications, meals and entertainment, motive fuel and qualifying motor vehicles (certain exceptions apply to all categories). The RITC rate is being phased out over three years and will be eliminated on July 1, 2018.

Businesses that are required to make this RITC rate adjustment may wish to use this as an opportunity to ensure that past RITC calculations have been correctly applied. Our Indirect Tax Recovery Review team has identified miscalculated RITCs as one of the most common areas of unclaimed or overpaid HST. Our qualified team can help your business confirm if amounts are being correctly calculated, assist with reporting past errors (including recovering overpaid amounts) and help set up systems for the new rate. Contact our Indirect Tax Recovery Review team for more information.

The information in this publication is current as of June 26, 2017. 

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.