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QST Phasing out the Restricted ITR Starting on January 1, 2018

QST Phasing out the Restricted ITR Starting on January 1, 2018

March 29, 2017 by Serge Vanier, CPA, CMA 7 Comments

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.

Filed Under: Uncategorized

Comments

  1. Miriam says

    Tuesday, 2 January 2018 at %I:%M %p

    Hi,

    I am wondering how hydro will be calculated based on the new tax changes for Quebec. How will the ITC be calculated? This is for a large corporation. Is there any way to see the calculation for this with the new change?

    Thank you,

    Reply
    • Serge Vanier, CPA, CMA says

      Friday, 5 January 2018 at %I:%M %p

      Hello Miriam,

      Assuming a company that is a QST registrant with a large business profile and is paying in 2018 10,000$ of QST on Hydro Quebec bills for energy necessary for their offices, then that company will be entitled to claim 2500$ (25%) as input tax refund (ITR). This assuming that this company incurs electricity exclusively in the course of commercial activities. You can try our tax calculator at http://www.advataxes.ca/en/tax-calculator-for-travel-expenses.aspx just select for business size (large) Expense type (Gas for cars), its the same rule as electricity, and select the jurisdiction (Quebec).
      Let me know if this help.
      Thanks
      Serge
      svanier@advalorem.ca

      Reply
  2. Vidalia says

    Thursday, 18 January 2018 at %I:%M %p

    bonjour,

    peut-on réclamer la TVQ à 25 % à compter de janvier 2018 si la facture est daté du 12-01-2018 pour des dépenses faites en mai 2016 ?

    Merci,

    Reply
    • Serge Vanier, CPA, CMA says

      Friday, 19 January 2018 at %I:%M %p

      Prenons l’exemple de l’achat d’un service de telecommunication; une grande entreprise aura droit a un RTI de 25% en 2018 dans la mesure ou le service a été acquis en 2018.Je vous invite a m’expédier vos factures types a svanier@advalorem.ca pour que je vous apporte des commentaires plus précis.
      Merci

      Reply
  3. Eva says

    Tuesday, 23 January 2018 at %I:%M %p

    Hello I would like to know for meals (starting Jan/2018) From what I understand we will be allowed to claim 25% of the TVQ correct? I was told by a coworker that we can only claim 25% of 50% of the TVQ. That sounds a bit strange to me. Eg. if our TVQ is $100.00 I thought I could claim $25.00 that is 25%. My coworker says we can only claim 25% of the 50% so 25% of half the TVQ 25% of $50.00 = $12.50. Please let me know what is correct here.

    Thank-you

    Reply
    • Serge Vanier, CPA, CMA says

      Tuesday, 23 January 2018 at %I:%M %p

      Hello.
      With respect to the general provision dealing with meal and entertainment, your coworker is correct. Assuming a meal expense before taxes of 100$ incurred in January 2018 and in Quebec. The GST paid will be 5$ and QST paid will be 9.98. The ITC to claim will be 2.50 (i.e. 50% of 5%) and the ITR to claim will be 25% of 50% of 9.98.

      Reply
      • Eva says

        Wednesday, 24 January 2018 at %I:%M %p

        Thank-you for your reply!

        Reply

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