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Discussion Starter #1
My small corporation used to have "active income", but since I retired, it only has "passive income" from interest on retained earnings. I was told that I can no longer claim ITC's for GST paid on various corporate expenses including GST on legal and accounting invoices because I now only have "passive income"? Can anyone cite a reference online that addresses this issue? I have searched extensively and cannot find anything.

Thanks for your help.
 

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I'm confused. ITC's reduce the amount of GST you need to pay to the government, but if you only have interest on retained earnings, presumably you're not paying GST anymore?
 

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Discussion Starter #3
My corporation is not collecting GST on sales, but it is still paying GST on goods and services, which it purchases. As an example, it is still paying GST on accounting and legal services fees so it still has ITC's, but cannot claim a refund because the only revenue my corporation has is passive income from interest.
 

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Thank you so much for your help, "getliquid". Very much appreciated! The interesting thing about this is I was also told that while I can't claim an ITC, the expense is still valid as a corporate tax deduction.
 

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Also for ITC purposes if you have mix of active and passive income in the same corporation, you have to prorate the GST paid.

A lot of professional accountants know nothing about ITCs because there are no GST/HST courses taught to obtain a CPA.
 
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