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Quebec Finally Phasing Out the Input Tax Refund (“ITR”) Restrictions Applicable to Large Businesses
13 12 2017

Quebec Finally Phasing Out the Input Tax Refund (“ITR”) Restrictions Applicable to Large Businesses

Commencing January 1, 2018, Large Businesses[1] in Quebec will be able to gradually claim ITRs on previously restricted expenses as listed below.

  1. Purchases or leases of road vehicles that must be registered pursuant to the Highway Safety Code in order to travel on public roads (vehicles weighing less than 3,000 kilograms);
  2. Fuel used to power the engines of such road vehicles (except diesel fuel);
  3. Electricity, gas, combustibles or steam used for purposes other than the production of goods intended for sale;
  4. Telephone services and other telecommunications services, except 1-800 and 1-888 services, and Internet services; and
  5. Food, beverage and entertainment expenses whose eligibility for deduction is limited to 50% pursuant to the Quebec Taxation Act.

The phasing out of these restrictions is scheduled to take place as follows:

January 1, 2018 25% recoverable
January 1, 2019 50% recoverable
January 1, 2020 75% recoverable
January 1, 2021 100% recoverable


Similar phase-out rules are scheduled for Large Businesses that will allow them to claim Input Tax Credits (“ITC”) in Prince Edward Island effective April 1, 2018.

Ontario has been phasing out restricted ITCs since July 1, 2015. Currently, Large Businesses in Ontario can recover 75% of their restricted ITCs. On July 1, 2018, the percentage will increase to 100%.

Please ensure that your company is ready for these changes and has also taken the Ontario changes into account.

Should you require more detailed information, please consult with a member of our Tax Department.

[1] Large Business: A business where the value of taxable supplies[2], other than supplies of financial services, made in Canada[3] by the registrant, and by any person with whom it is associated, exceeds $10 million during its last taxation year.

[2] Taxable Supply: Includes a zero-rated supply and also includes supplies made for nil consideration, pursuant to a joint election made by specified members of a group of closely-related corporations.

[3] Made in Canada: Includes the value of all exports together with supplies deemed to be made outside of Canada.

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