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
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.