Note for large businesses with taxable revenues over $10 million subject to the restricted input tax credit rules, a reminder that on July 1, 2016 the amount of RITC add-back is further reduced from 75% of the 8% provincial portion of the HST to 50% of the 8% provincial portion of the HST. In case you missed it, on July 2015 the RITC add-back was reduced from 100% of the 8% provincial portion of the HST to 75% of the 8% provincial portion of the HST.
Below is a sample entry to record a $100 auto fuel expense plus $13 of HST subject to the 100% restriction.
DR Auto fuel expense | 108 |
DR GST receivable | 13 |
CR Accounts Payable | 113 |
CR RITC payable | 8 |
After July 1, 2016, the restriction will be reduced to 50% thus the entry will now be:
DR Auto fuel expense | 104 |
DR GST receivable | 13 |
CR Accounts Payable | 113 |
CR RITC payable | 4 |
Last year CRA released a document entitled GI-171 Phasing out of Recaptured Input Tax Credits in Ontario which provides additional information with respect to this change. The document can be found here.