Indirect Taxes and International Section

Indirect Taxes

Input tax credits and input tax refunds: Check your claims before deadlines expire

It's important to check that you have claimed all the input tax credits (ITCs) and input tax refunds (ITRs) to which you are entitled, including expenses such as mileage allowances, employee expense reimbursements and GST paid on imports. You can generally claim ITCs and ITRs if you are registered for GST/HST and QST, if the expenses relate to your commercial activities and if you have adequate supporting documentation.

The general time limit for claiming ITCs and ITRs is four years from the end of the initial reporting period in which they could have been claimed. However, this period is reduced to two years for certain financial institutions and large corporations. It is therefore important to review your previous returns and expenses to ensure that all eligible claims have been made within the prescribed timeframe.

GST rebate on new residential rental property

If you are the purchaser or builder of a new residential rental property, you may be eligible for a partial rebate of the GST and QST paid on the purchase or construction of the property.

As a general rule, the GST and QST refund is a maximum of 36% of the GST and QST amounts paid. However, in the case of GST, this rebate gradually decreases when the value of the property exceeds the threshold of $350,000 ($200,000 in the case of QST), and becomes nil when the value reaches $450,000 or more ($225,000 in the case of QST). Thus, the maximum GST rebate is $6,300 and the maximum QST rebate is $7,182.

In addition, the federal government has announced a measure applicable to certain rental properties for which construction began between September 14, 2023, and December 31, 2030, at the latest, and which must be completed by December 31, 2035. If the building meets all the criteria, it is possible to obtain a full refund of the GST paid, regardless of the value of the building.

Related entities - supplies deemed to have been made for nil consideration

Businesses that are members of a closely related group can make a joint election under the Excise Tax Act and the Act respecting the Québec sales tax.

This election allows certain taxable supplies between these members to be treated as having been made for no consideration. This mechanism eliminates the obligation to collect and remit GST/HST and QST on these transactions. This election simplifies tax management and optimizes cash flow.

If no election has yet been made between the related parties, and taxable supplies are made between them, it may be worth examining the possibility of making such an election. This could reduce the administrative obligations and cash flows associated with GST/HST and QST.

If the election has been made, it is essential to review the elections annually to ensure that the parties remain eligible and that the conditions continue to be met. This is particularly important in the event of restructuring or changes in shareholder relationships.

International Section

Stays in the United States

If you spent more than 183 days in the U.S. during 2024, the U.S. tax authorities could consider you a U.S. tax resident. You could also be considered a U.S. tax resident if you stayed more than 30 days in 2024, and more than 182 days in the last three years, considering the total days in 2024, one third of the days in 2023 and one sixth of the days in 2022. In a certain situation, filing IRS Form 8840 before June 15, 2025, may be necessary in order to claim an exemption from filing a U.S. tax return.

Contact your Forvis Mazars advisor to assess your situation and determine whether you are required to file U.S. forms.