28 March 2013 Interpretation Case No. 141341

In finding that in the situation where the operator under a joint venture is not a large business and one of the three joint venture participants is a large business, the purchase of electricity by the operator for $100,000 plus HST of $13,000 would result in the recapture of the provincial component of HST based on the proportionate (33 1/3%) interest of the large business participant, CRA stated:

…as one of the participants is a large business and the joint venture election is in effect, the operator would be deemed to be a large business in respect of purchases made on behalf of the large business participant pursuant to subsection 27(6) of the Regulations. Therefore, the amount of ITC to be recaptured would be limited to the large business participant's interest, or $2,666.64 ($8,000 [HST Provincial Component] X 33 1/3 %).

In finding that, in the situation where a large business is the operator under a joint venture and all three joint venture participants are small or medium businesses, the purchase of electricity by the operator would result in the recapture of the provincial component of HST, CRA stated:

Where the operator is a large business and a joint venture election has been made with one or more participants, the purchases are deemed under paragraph 273(1)(a) to be acquired by the operator and not the participants….Therefore, the recapture of ITCs for the provincial component of the HST would be required under subsection 236.01(2) for all purchases of specified property or services made by the operator, irrespective of whether the participants are large businesses or not.