Canada: Large businesses may claim all QST; phaseout of input tax refund restrictions (Quebec)

Canada: Large businesses may claim all QST

Quebec has fully phased out its input tax refund (ITR) restrictions as of 1 January 2021. As a result, certain large businesses may now claim 100% of the Quebec sales tax (QST) that becomes payable on goods and services that were previously subject to the ITR restrictions as of 1 January 2021 (up from 75%).

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Affected businesses may need to adjust certain accounts in their systems and calculations that are related to the property and services that were subject to the ITR restrictions. These adjustments may include:

  • Accounts related to purchases and leases of certain vehicles
  • Common area maintenance charges
  • Employee expense accounts

In addition, large businesses that qualify to claim ITRs will need to review when the tax became payable (i.e., before or after 1 January 2021) in order to determine whether they can claim an ITR of 100% or 75% of the QST payable. These businesses need to consider whether all the required changes were made for the previous three phase-out periods, and determine if they have missed any related ITRs over the last three years.

Read a January 2021 report prepared by the KPMG member firm in Canada

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