TEI Urges Changes to Canada Regulation on Restricted Input Tax Credits

On March 7, 2011, TEI submitted a letter to Finance Canada and Canada Revenue Agency recommending amendments to the Harmonized Value-added Tax System regulations to make restricted input tax credit (RITC) reporting administrable. The letter follows up on TEI's December 2010 liaison meetings with Canada Revenue Agency and the Department of Finance, where TEI representatives raised the timing for reporting and applying the rules relating to RITCs. TEI maintains that reporting RITCs pursuant to the timeframes required in Harmonized Value-added Tax System Regulations, No. 2 (Regulation) is not possible, and the inability to comply exposes businesses to significant penalties and increased administrative costs. The Institute respectfully submits that the Regulation should be amended to allow more time for reporting RITCs and requested that CRA apply administrative tolerance when auditing the RITCs reported on registrants' returns in the meantime.

The letter was prepared under the aegis of TEI's Canadian Commodity Tax Committee, whose chair is Kim N. Berjian.

Download the submission.