Temporary recapture of input tax credits requirement - Ontario and Prince Edward Island

As a temporary measure beginning July 1, 2010 in Ontario and April 1, 2013 in Prince Edward Island, large businesses and certain financial institutions have to recapture (repay) their input tax credits (ITCs) for the provincial part of the HST paid or payable on specified property and services.

Generally, you would be a large business during a given recapture period if you are GST/HST registrant and your recaptured ITC threshold amount is greater than $10 million in your last fiscal year that ended before a recapture period. Certain financial institutions would also be subject to these rules even if their revenue does not exceet the $10 million threshold.

You must report your recaptured ITCs in the reporting period in which the ITCs first became available. Failing to recapture ITCs as and when required could result in penalties. Generally, existing anti-avoidance rules apply to transactions to which the RITC requirement applies. Additional anti-avoidance rules may be implemented in order to maintain the integrity of the GST/HST and the RITC requirement.

To simplify compliance, Form RC4531, Election or Revocation of an Election to Use the Estimation and Reconciliation Method to Report the Recapture of Input Tax Credits, is available for a large business to estimate the amount of recaptured ITCs in its monthly or quarterly reporting period and reconcile any differences between the amounts reported during the year and the actual amounts at year end, using Schedule C, Reconciliation of Recaptured Input Tax Credits (RITCs) of its GST/HST return, within three months of the year end.

For information on the recapture of ITCs, see:

• GST/HST Technical Information Bulletin B-104, Harmonized Sales Tax - Temporary Recapture of Input Tax Credits in Ontario and British Columbia;
• GST/HST Info Sheet GI-165, Prince Edward Island: Transition to the Harmonized Sales Tax - Builders and Recaptured Input Tax Crédits; and
• GST/HST Info Sheet GI-171, Phasing out of Recaptured Input Tax Credits in Ontario

Forms and publications

• Guide RC4022, General Information for GST/HST Registrants
• GST/HST Info Sheet GI-100, Harmonized Sales Tax: Builders and Recaptured Input Tax Credits
• GST/HST NOTICE249, Questions and Answers on the New Reporting Requirements for GST/HST Registrants
• Form RC4530, Election or Revocation of an Election to Use a Production Proxy to Report the Recapture of Input Tax Credits
• Form RC4531, Election or Revocation of an Election to Use the Estimation and Reconciliation Method to Report the Recapture of Input Tax Credits
• Income Tax Interpretation Bulletin IT-64R4-CONSOLID, Corporations: Association and Control

Date modified:

2015-12-08