Changes are coming for large businesses, generally businesses with taxable and zero-rated revenues that exceed the $10 million threshold during their last fiscal year. These businesses have been required to recapture input tax credits (ITCs) claimed in respect of the provincial part of the Ontario HST paid or payable on specified property and services. Starting July 1, 2015, the recapture rate in Ontario will start to be phased out.
Specified property and services
Generally speaking, the specified property and services to which the recaptured input tax credit (RITC) requirement applies include specified road vehicles, energy, telecommunication services, and certain meals, beverages and entertainment (generally those subject to the 50 percent income tax limitation). Failure to recapture ITCs at the time and in the manner required can result in the imposition of penalties. Penalties can be assessed for both under- or over-reported RITCs.