Tax Memo: Ontario Sales Tax Harmonization – Input Tax Credit Restrictions

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On November 16, 2009, Ontario Finance Minister Dwight Duncan issued a new publication, Ontario’s Tax Plan for Jobs and Growth. The publication provides details on the special restriction on input tax credits (ITCs) for the 8% provincial portion of the HST paid by large businesses for selected purchases made during the first eight years after harmonization.

Small- and medium-sized businesses will not be affected by these special ITC restrictions. An individual will be considered a large business if:

• The total consideration for taxable supplies (including zero-rated supplies)
  • Made in Canada by the person, or by associates of the person
  • Paid or payable in the previous fiscal year, exceeded $10 million

• The person is, or is related to, one of the following financial institutions:
  • A bank
  • A trust company
  • A credit union
  • An insurer
  • A segregated fund of an insurer
  • An investment plan