Changes to the HST: Phasing out of Recaptured Input Tax Credits in Ontario and changes to HST rates in Newfoundland and Labrador, New Brunswick and Prince Edward Island

June 2016

Phasing Out of Recaptured Input Tax Credits in Ontario
As of July 1, 2015

Since the HST came into effect in Ontario, large businesses have been subject to the temporaryrecapture requirement—i.e. reversal—of the provincial (8%) component of the HST of the eligible input tax credits (ITCs), with respect to certain property and services such as motor vehicles, fuel used in these motor vehicles, electricity, gas, steam, certain telecommunication services and meals and entertainment.

A person is generally considered to be a “large business” during a particular recapture period if the person is a GST/HST registrant with taxable sales in excess of $10 million, a specified financial institution or a person that is related to a specified financial institution. The recapture requirement will be gradually phased out based on the following calendar:

It is important to note that the change in the recapture rate will have to be reflected in the first return for periods starting July 1, 2016.

More information is available in the Canada Revenue Agency Guide found here:

HST increase in Newfoundland and Labrador, New Brunswick and Prince Edward Island – 2016-2017 Budget
The Newfoundland and Labrador and New Brunswick governments announced a harmonized sales tax (HST) rate increase in their last budgets, from 13% to 15%, effective July 1, 2016. Prince Edward Island’s government announced a harmonized sales tax (HST) rate increase, from 14% to 15%, effective October 1, 2016.
Therefore, we recommend that you update your systems to make sure that HST rates are modified accordingly.

About Richter 
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