EAP: Enhancement Request to Support RITC Requirement for Canada (Doc ID 1947776.1)

Last updated on MARCH 09, 2017

Applies to:

PeopleSoft Enterprise FIN Payables - Version 9.2 and later
Information in this document applies to any platform.

Goal

For certain products the VAT is not-recoverable for the provincial part of the VAT in Ontario, Quebec and PEI. The GST part is fully recoverable.

Canada has the following limits for certain categories of tax inputs:
- Federal 50% ITC restriction* on meals & entertainment ('M&E')
- Québec 50% ITR restriction* on M&E***
- Ontario ITC recapture** on: 1) M&E; 2) energy; 3) telecom; 4) road/vehicles/fuel/parts
- Québec ITR restriction* on 1) M&E; 2) energy; 3) telecom; 4) road/vehicles/fuel/parts
- PEI ITC recapture** on: 1) M&E; 2) energy; 3) telecom; 4) road/vehicles/fuel/parts

The limits for the provinces apply only to the provincial part of the tax not to the GST. The limits on meals can apply only to the GST portion. But since tax is calculated by tax code and not by tax authority, we cannot setup different tax treatments for the federal or province level.

Using the VAT use type for RITC is what we did but we have to have different RITC use types because the provincial tax rates differ and setting up the percentages is not straightforward. We have to adjust the percentages to make sure that the correct recovery amount is calculated. Because the amounts are calculated of the total amount the resulting recovery and non-recovery amounts can actually slightly differ from the amounts that would be calculated if tax was calculated by authority.

The issue with reporting are:
- Non-recoverable VAT is not loaded in the VAT transaction table so we can't report on it. VAT reporting should show total tax minus the RITC amount.
- There is no way to determine for which VAT authority the tax was non-recoverable.  We only have the information by tax code.
 

Solution

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