Input tax credits (ITCs) let GST/HST-registered businesses get back the GST/HST they paid on business purchases. You claim them on line 106 of your GST/HST return, and they’re subtracted from the GST/HST you collected. You can claim ITCs only for purchases used in your commercial (taxable) activities, you need proper receipts, and you generally have 4 years to claim them. You can’t claim ITCs on PST, personal expenses, or purchases used to make exempt supplies, and meals and entertainment are limited to 50%.
On this page
- What Are Input Tax Credits? The Short Answer
- Who Can Claim ITCs
- What You Can Claim ITCs On
- What You Can’t Claim or Can Only Partly Claim (Meals, Personal Use, Exempt Supplies)
- How to Calculate and Report ITCs on Your GST/HST Return
- Receipt Requirements: What Your Invoices Must Show
- Time Limits for Claiming ITCs
- FAQ: Input Tax Credits
- Get Your GST/HST Returns Filed Correctly
What Are Input Tax Credits? The Short Answer
Every time you collect GST/HST from a customer, you owe it to the CRA. Every time you pay GST/HST on something for your business, you can claim it back as an ITC. You only remit the difference.
Example:
| Amount | |
| GST collected from customers this quarter | $6,500 |
| GST paid on business purchases (ITCs) | $2,100 |
| Net GST to remit | $4,400 |
If your ITCs are bigger than the GST you collected, the CRA pays you a refund.
Who Can Claim ITCs
You can claim ITCs if all of these apply:
- You’re registered for GST/HST (or required to be)
- You paid or owe GST/HST on the purchase
- The purchase is for use in your commercial activities (making taxable or zero-rated sales)
- You have the right documentation
Who can’t:
- Small suppliers who aren’t registered (under $30,000 in sales and chose not to register)
- Businesses that only make exempt supplies, like most medical and dental services, residential rent, and many financial services
- Anyone on the Quick Method for most operating expenses (you can still claim ITCs on capital purchases like equipment and vehicles)
What You Can Claim ITCs On
If it’s used in your taxable business, the GST/HST on it is generally claimable:
| Expense | ITC claimable? |
| Rent for your office, shop or warehouse | ✅ Yes |
| Inventory and supplies for resale | ✅ Yes |
| Equipment, computers, tools | ✅ Yes |
| Software and subscriptions | ✅ Yes |
| Professional fees (accounting, legal, marketing) | ✅ Yes |
| Advertising | ✅ Yes |
| Phone and internet (business portion) | ✅ Yes |
| Fuel, repairs and maintenance on business vehicles | ✅ Yes (business-use portion) |
| Home office expenses (business-use portion) | ✅ Yes |
| Business travel (flights, hotels) | ✅ Yes |
| Commercial real property | ✅ Yes, based on use |
What You Can’t Claim or Can Only Partly Claim (Meals, Personal Use, Exempt Supplies)
| Expense | Rule |
| Meals and entertainment | Only 50% of the GST/HST |
| Personal or family expenses | ❌ Not claimable |
| PST (BC, Saskatchewan, Manitoba) | ❌ PST is never an ITC. Only GST or HST |
| Purchases used for exempt supplies | ❌ Not claimable (e.g., a dentist’s clinic supplies) |
| Mixed taxable and exempt use | Claim only the taxable portion |
| Club memberships (golf, fitness, dining) | ❌ Not claimable |
| Passenger vehicles over the CCA limit | ITC limited to GST/HST on the capped amount |
| Vehicle used partly personally | Only the business-use portion |
| Purchases from non-registered suppliers | ❌ No GST charged, so no ITC |
| Gifts to employees and staff parties | Restricted. Treat carefully |
How to Calculate and Report ITCs on Your GST/HST Return
Step 1: Total the GST/HST paid on eligible purchases for the reporting period (from your bookkeeping, not your bank statement).
Step 2: Apply restrictions: 50% for meals, business-use % for vehicles, phone and home office.
Step 3: Enter the total on line 106 of your GST/HST return.
Step 4: Keep the receipts. You don’t send them in, but the CRA can ask for them.
Partial business use example: Your phone bill is $100 + $5 GST, and you use it 70% for business.
ITC = $5 × 70% = $3.50
Capital property: For equipment and vehicles, you can claim the ITC in full in the period you buy it if you use it primarily (more than 50%) in your business. Passenger vehicles have special rules.
Receipt Requirements: What Your Invoices Must Show
The information you need depends on the total amount of the purchase (including tax):
| Purchase total | What the receipt or invoice must show |
| Under $100 | Supplier’s name (or trade name), date (or invoice date), total amount paid |
| $100 to $499.99 | All of the above, plus the supplier’s GST/HST registration number and the GST/HST charged (or a statement that it’s included and the rate) |
| $500 or more | All of the above, plus your name or business name, terms of payment, and a description of the goods or services |
No GST/HST number on a receipt of $100 or more = no ITC if the CRA reviews it. Check registration numbers using the CRA’s GST/HST registry for larger suppliers.
Time Limits for Claiming ITCs
- Most businesses have 4 years from the due date of the return for the period in which the ITC could first have been claimed.
- Large businesses (taxable supplies over $6 million in each of the last two years) and listed financial institutions have only 2 years.
- You can claim a missed ITC on a later return within the time limit. You don’t need to amend the old one.
FAQ: Input Tax Credits
Can I claim ITCs before I registered for GST/HST?
Only in limited cases, mainly for inventory and capital property you still have on hand when you register, and certain prepaid rent or services that relate to the period after registration. Most other pre-registration GST/HST can’t be recovered.
Can I claim ITCs on Amazon or online purchases?
Yes, if the seller is GST/HST-registered and charged GST/HST, and you have an invoice that meets the requirements above.
Do I need original paper receipts?
No. Clear digital copies or scans are acceptable, as long as they show all the required information.
Can a sole proprietor claim ITCs on a car?
Yes, for the business-use portion of the vehicle’s purchase price (subject to the passenger vehicle limit) and operating costs.
Do ITCs reduce my income tax expenses?
Yes. If you claim the GST as an ITC, you deduct only the pre-tax amount as a business expense on your income tax return. You can’t claim the same GST twice.
What triggers a CRA review of my ITCs?
Large refund claims, sudden jumps in ITCs, or ITCs that look high compared with your sales. Keep your documents organized. See common GST/HST mistakes.
Get Your GST/HST Returns Filed Correctly
