Within an interpretation bulletin dated October 25, 2017, (TVQ 206.1-10) the Government of Quebec explains the mechanics of the phasing out of the ITR restrictions for large businesses (LB) starting on January 1, 2018.
The scheme of these rules is similar as the current one that exists under the HST regime for LB in Ontario and in PEI.
As a recap, this QST measure grants an ITR at the rate of:

25% for the period of January 1, 2018 to December 31, 2018
50% for the period of January 1, 2019 to December 31, 2019
75% for the period of January 1, 2020 to December 31, 2020
100% from January 1, 2021 and after, to LB on expenses covered by the ITR restrictions.

Generally speaking those expenses are:

• Kilometer allowances
• Fuel for vehicles of less than 3,000 KG
• Vehicles of less than 3,000 KG
• Meals and entertainment (including meal allowances)
• Telecommunication
• Energy

Paragraph 13 of this bulletin mentions that the QST paid for a lease interval of a vehicle that begins on or after January 1, 2018 will entitle the LB to an ITR at the rate of 25%. QST paid for a lease interval that begins on or after January 1, 2019 will entitle the LB to an ITR at a rate of 50%. QST paid for a lease interval that begins on or after January 1, 2020 will entitle the LB to an ITR at a rate of 75%. Finally QST paid for a lease interval that begins on or after January 1, 2021 will entitle the LB to an ITR at a rate of 100%.
Paragraph 43 of the bulletin deals with allowances, such as kilometer allowances. The paragraph stipulates that allowances paid in 2018 will entitle the LB to an ITR of 25%, and so forth for the subsequent years.
As for meals and entertainment and meal allowances, LB have to take into consideration that in general these expenses are also subject to the usual 50% limitation.

For periods starting on July 1, 2017 and ending on June 30, 2018 the recapture rate of input tax credits (RITC) in Ontario is now set at 25%. Large businesses, as defined under the Excise Tax Act, are subject to the recapture rules.
Generally, an organization is considered a “large business” during a period if the organization is a GST/HST registrant with revenues of more than $10 million in its last fiscal year;
The recapture amount is calculated solely on specified property and services acquired or brought into Ontario, namely:
1) electricity, gas & steam
2) certain telecommunication services
3) food, beverages and entertainment, subject to the 50% limitation
4) qualifying motor vehicles
5) fuel (other than diesel fuel) that is for the engine of a qualifying motor vehicle
As an example a $100 meal allowance in Ontario in the period of July 2017; the ITC will equal $5.75 and the RITC will equal $0.88 or 25% of the provincial component of the value added tax subject to 50%. More info in CRA info-sheet GI-171

Today, Quebec Finance minister Carlos Leitao tabled its 2017-2018 budget. In the section listing the revenue forecast for 2017-2018 for the province, (section D entitled “the Government’s Detailed Financial Framework”) it states that “… the gradual elimination of restrictions of input tax refunds, for large businesses as of January 1, 2018 puts downward pressure on the growth of consumption tax revenues.”

The Quebec government reiterates that large businesses will be able to claim more taxes on some kind of expenses starting on January 1, 2018.

As a reminder the restricted input tax refunds are generally applicable on;
1) Meals and entertainment
2) Telecommunication services
3) Fuel for vehicles of less than 3000 KG
4) Vehicles of less than 3000 KG
5) Energy

This process is very similar to the restricted input tax credits (RITC) rules applicable in Ontario and in Prince Edward Island. The phasing out of RITCs is spread over a 4-year period, yet with different implementation date.

So in January 2018, a meal expense incurred by a large business will trigger certain rules and rates in Quebec, for QST Purposes, and different rules and rates in Ontario for HST purposes. The same goes with PEI. Regular recovery rates are applicable in other provinces, yet the tax rate may differ.

The QST phasing out period for large businesses is as follows:
January 1, 2018 to December 31, 2018: 75% still subject to restrictions
January 1, 2019 to December 31, 2019; 50% still subject to restrictions
January 1, 2020 to December 31, 2020: 25% still subject to restrictions
January 1, 2021 and onward: no more restrictions

Advataxes is a software that is built on expense categories, also called supplies, the selection of the province by employees, and the GST-QST organization profile to manage well these kind of tax rules recoveries.

The use of the spreadsheet to fill out and submit employee expenses is as old as the day that the Excel software and other similar ones (e.g. Lotus 1-2-3, VisiCalc) were put on the market in the 80’s. A few simple formulas on one tab, a minimum description, stapling receipts in the back, and the expense report is ready to be sent to the supervisor for review.

We have to keep in mind that whatever tool is used to fill out and submit an employee expense report, either a spreadsheet or an employee expense software, it has to be practical. For instance in its design, it has to take into account the chart of account of the organization, its internal policies, and all the tax rules. It should include invoices to back up a refund claim, and an area to allow the employee to insert some explanations.
When organizations are expanding their operations, adding internal policies, and when the regulatory environment is more complex than ever, such as the current rules governing the GST, HST & QST, handling the traditional spreadsheet while attempting to remain efficient can be rather challenging. Here is a list of nine factors to take into consideration:

1) Employees Expenses; not your Typical Supplier
Although it is common to have an approval process for a given trip that an employee will participate in, it is rare that there is an approval process for the selection of each supplier during the trip. The suppliers’ selections by employees are not your typical suppliers; employees have some latitude in the selection of their suppliers. The documentation supporting those expenses such as parking, tolls, purchases over the internet, may not always be at its best. In the case of allowances, such as KM, meals and clothing, there is simply no documentation since the nature of an allowance is that it replaces an expense receipt or a series of expenses in the case of KM allowance.

2) Allocating Expenses Incurred by Employees to a Project
It is common to encounter organizations that have to allocate some expenses incurred by employees to a given project. An organisation may want to control costs relating to a given activity, or it may have to charge back some expenses incurred by employees to clients.

3) Allocating Expenses to the Chart of Account
Identifying every accounts for a given expense for an employee is not that easy when the Excel Spreadsheet is “one size fits all”.
In several organizations, there is an account segment that relates to a division that an employee is working for. Others have to assign expenses to a cost center.

4) Ratio of Travel Expenses over All Expenses
In a typical company, travel expenses represent 10% of all expenditures. We are not dealing with an expenditure that is insignificant. So a proper management of those expenses is required in order to ensure the reporting is adequate, the GST, the HST and QST are fully recovered, the organization’s policies are respected and expenses are not reimbursed twice.

5) Volume of Employee Expenses Reports
The fact that an employee expense system is managed by a spreadsheet, may be fine in situations where the volume of expense reports submitted by employees is low. But as soon as the volume of expense reports increases, the lack of a central database to provide an insight into spending is problematic.

6) The GST-HST & QST Rules are Numerous and Changing
Technically there could be as many tax rates as there are provinces in Canada. In that respect; it is a moving target. In 2016, three provinces changed their HST rate. As for the tax rules; they are rather numerous and of course they also change periodically. Currently in Ontario, the HST is at a rate of 13%, yet for large businesses, the recapture rate on input tax credit on the provincial portion of the HST on expenses such as meals will be lowered on July 1, 2017 to 25%. If you take into consideration all the various rates across the country and all the different rules, this is an area where the Excel spreadsheet, may not be the most efficient tool. Since GST, HST & QST are by and large, recoverable taxes, not having a good employee expense system can result in a loss.

7) Mismanagement of GST/HST & QST on Employee Expense may Represent a Significant Cost
It is important to properly manage recoverable taxes since they are an asset that can be materialised if the tax rules are followed. It is common to encounter tax registrants who got GST/HST QST significant assessments on employee expenses, even in the six digits, due to the difficulties to manage these rules in regards to the limitation of their spreadsheet.

8) Rectifying an Excel Spreadsheet may be a Time Consuming Process
To modify a value on an expense report stored on a server in the cloud is easy. You only need an internet access, and the value that is on a centralized database can be modified for all (e.g. the employee, the supervisor and the accounting department). But to modify a template when it is sent back and forth by e-mail or by internal mail between an employee, the accounting department and the supervisor, is just not efficient. Keeping track of the different versions on a given expense report can be a challenge, and may lead to errors. Different studies abound to quantify the time loss on managing the manual employee expense process.

9) Old Versions of the Employee Expense Template Still Used?
Any changes to an Excel Spreadsheet, due for instance to new projects, new divisions, new tax rules, may results in errors resulting from having multiple employee expense template versions available in an organization. This is one of the several issues of not having all the employee expense located on a centralized database.

CONCLUSION
With a significant volume of employee expense reports, and dealing with the complexity of the structure of a chart of account, changing Canadian sales tax rules, the policies of an organization, then the spreadsheet limitations can be costly for your organization.

The Canada Revenue Agency released in June 2015 the GST/HST Info Sheet GI-171, “Phasing out of Recaptured Input Tax Credits in Ontario”. The info sheet explains how the reporting have to be done within CRA GST/HST Netfile login page for large businesses effective for reporting periods starting on July 1, 2015. For periods before July 1, 2015 and after June 2010, the recapture rate is 100%. For periods starting on July 1, 2015 end ending on June 30 , 2016, the recapture rate is at 75%. For reporting periods starting on July 1, 2016 and ending in June 2017, the recapture rate is 50%.Simulation of this calculation can be performed at https://www.advataxes.ca/en/tax-calculator-for-travel-expenses.aspx for recapture rates applicable on the day the test is performed.
The following are two examples for the 50% recapture rate for two specified properties and services: cell phone monthly charges and meals & entertainment, incurred and reimbursed in July 2016. The profile setting within Advataxes for this corporation is a ratio of commercial activities of 100% and of course; “large businesses” for the GST status. The expense before HST in both cases is $100, so there is $13 of HST paid in both instances.

For the above example and for expenses in periods starting in July 2016 and ending in June 2017 the RITC for the meal expense would be:
$4 × 50% = $2
The net meal expense would be $108.50.
For the period of July 2016 to June 2017 in the above example the RITC for the cell phone monthly would be:
$8 × 50% = $4
The net cell phone expense would be $104.
So the bottom line is more revenue for large businesses on specified properties and services incurred in Ontario starting on July 1, 2016.
GST/HST Netfile requires that you input the recapture of input tax credits on the line for “Ontario 50%” so it will calculate the effective RITC amount to be remitted to the CRA. The recapture rate is scheduled to be further reduced in Ontario, so it should be eliminated by 2018. To some extent, similar rules exist in Prince Edward Island for the HST and in Quebec for the QST.