The Ontario Rebate for Electricity Consumers Act, 2016 (Ontario Rebate Act), provides financial assistance to certain Ontario electricity recipients by means of an 8% reduction in the amount payable for electricity. The 8% rebate amount is shown as a separate line item that reduces the total amount payable for electricity after the HST has been calculated and applied. How does the rebate impact input tax credits and recaptured ITCs?
After ruling that the rebate “has no impact on claiming ITCs recapturing ITCs,” CRA stated:
The rebate amount is not a reduction in the consideration charged by the supplier for the supply of electricity. The supplier retains the full amount of the consideration charged in respect of the supply. The 13% HST is still payable on the invoice amount, and as such is required to be remitted by the supplier.
Therefore, where a person is eligible to claim an ITC in respect of the HST paid or payable, to the extent that the electricity is acquired in the course of the person’s commercial activities, the person may claim the full amount of tax charged. Furthermore, where a person is required to recapture ITCs, the amount subject to recapture is the provincial portion of the tax charged.
