Does Ontario's recaptured ITC rule apply to a leased vehicle used in my business?
No - Ontario's recaptured input tax credit (RITC) rule, which used to require "specified persons" to repay the provincial portion of the ITC on qualifying vehicles, was phased out in stages and eliminated entirely for amounts payable on or after July 1, 2018. A leased vehicle used in your business today isn't subject to any Ontario ITC recapture. While the rule was in force, leasing rather than buying did not take a vehicle outside it if the vehicle otherwise fitted the category the rule targeted.
This mattered because leasing is sometimes assumed to carry simpler, more favourable tax treatment than owning a vehicle outright, whereas for a specified person the recapture obligation followed the type and use of the vehicle rather than how it was financed. Related costs such as fuel for a qualifying vehicle fell within the affected categories too.
Since the rule no longer applies to anything payable on or after July 1, 2018, there is nothing current to calculate — it matters only for historical periods still open to reassessment, which a tax advisor can confirm for your own filings.
Key takeaways
- Ontario's RITC rule was eliminated for amounts payable on or after July 1, 2018, so a leased vehicle is not subject to recapture today.
- Leasing was never a way around the recapture obligation while the rule existed, but the obligation itself no longer applies to anyone.
- Related costs such as fuel for a qualifying vehicle fell within the affected categories while the rule was in force.
- Have a tax advisor review your lease structure to confirm recapture is calculated correctly.