A business with total taxable supplies and those of the business’ associates exceed $10 million for the preceding fiscal year is considered as large business. The Quebec Revenue recently published extra information regarding the upcoming repeal of the 5% simplified method which is applied by many large businesses to demand QST input tax repayments for employee expense accounts. Large businesses will no longer be able to apply the 5% simplified method for expenses acquired by their employees or allowances given to these individuals on or after January 1, 2014.
Factor method replaced 5% simplified method for some expenses in large business. By applying a 9/109 QST factor method, eligible large businesses will be able to claim qualifying input tax repays regarding expense reimbursements paid to employees. For expense approvals paid to employees, an eligible input tax refund will be demanded based on a 9.975/109.975 tax fraction of the qualifying expense allowances. Again, the QST factor method and the tax fraction method will not apply on bounded goods and services for large businesses for demanding input tax refunds, and these large businesses will not be eligible to claim any input tax refunds on such restricted expenses.
