The appointment of a large-business operator of an Ontario joint venture can cause the denial of provincial input tax credits

When Ontario (and other provinces) agreed to join the HST system, one of the added features of the provincial component of the HST system was that input tax credits to which "large businesses" otherwise would be entitled for various categories of purchases (such as fuel, electricity, telecommunications services, food and entertainment) were "recaptured" (i.e., effectively denied).

CRA has confirmed that because the operator under an effective joint venture election is deemed to have itself acquired the property and services supplied to the joint venture, the provincial component of HST on the specified types of supplies to the joint venture will be recaptured if the operator is a large business, even if all the joint venture participants are smaller businesses.

Neal Armstrong.  Summary of 28 March 2013 Interpretation Case No. 141341 under ETA – 236.01(2) and New Harmonized Value-Added Tax System Regulations, No. 2 - s. 27(6).