What Is an Input Tax Credit, and What Can I Claim?
Updated: Oct 9
Short answer: An input tax credit (ITC) is the GST/HST your business paid on its purchases, claimed back on your GST/HST return. You can claim it if you are registered, the purchase is for your business, and you have the right receipt. Meals and entertainment are limited to 50%, and a missed ITC can usually be claimed for up to four years.
An ITC is not an income tax deduction. It is a credit against the GST/HST you collected: you subtract your ITCs from the tax you charged customers and pay the difference to the CRA, or get a refund if your ITCs are higher. Your bookkeeper records the tax on every bill, so the ITCs on your return match your books.
What is an input tax credit?
An input tax credit is how a registered business gets back the GST/HST it pays on business costs. It keeps the tax from being charged again and again as goods move from one business to the next.
Here is a simple Ontario example at 13% HST, for one quarter:
Amount | |
Sales before tax | $100,000 |
HST you collected (13%) | $13,000 |
Business purchases before tax | $40,000 |
HST you paid on those purchases (your ITCs) | $5,200 |
Net HST you remit to the CRA | $7,800 |
ITCs are reported on line 106 of the GST/HST return.
Who can claim input tax credits?
Only a GST/HST registrant can claim ITCs. The tax must have been paid or payable while you were registered, on something you bought for your business.
Registered businesses. You must be registered during the reporting period in which the GST/HST was paid or became payable.
Small suppliers. A business under the $30,000 small supplier threshold that has not registered cannot claim ITCs. It can register voluntarily to start claiming them. Our post on when to register for GST/HST explains the threshold.
Quick Method users. If you use the Quick Method, you cannot claim ITCs on operating expenses. You can still claim them on land and on capital purchases such as computers, vehicles and large equipment.
Businesses with exempt sales. GST/HST paid on purchases used to make exempt supplies cannot be claimed.
What expenses can I claim an ITC on?
You can claim the GST/HST on most purchases used in your business, as long as they are reasonable in quality, nature and cost for the kind of business you run.
Common expenses the CRA lists as eligible:
commercial rent and equipment rentals
legal, accounting and other professional fees (including your bookkeeping fees)
office supplies, telephone and utilities
advertising, delivery and freight
fuel, maintenance and repairs
travel such as hotels, airfare and car rentals
inventory you buy to resell
equipment, computers, furniture and other capital property
Common purchases you cannot claim:
anything bought for personal use
memberships in clubs whose main purpose is dining, recreation or sport (golf, fitness, hunting and fishing clubs)
purchases used to make exempt supplies
Can I claim the HST on meals and entertainment?
Yes, but only half. Most businesses can claim 50% of the GST/HST paid on reasonable meals and entertainment.
For example, a client lunch costs $100 plus $13 HST. The ITC is $6.50, not $13. The same 50% limit applies to meals while travelling for business, even though the hotel and airfare on the same trip are claimed in full. Long-haul truck drivers can claim 80%.
What if an expense is partly personal?
For most operating expenses, you claim the business share. The rule has three bands:
Business use | ITC you can claim |
90% or more | 100% of the GST/HST |
More than 10% and less than 90% | The business percentage |
10% or less | None |
For example, if a phone bill includes $13 HST and the phone is used 70% for business, the ITC is $9.10. The way you work out the percentage must be fair, reasonable and used consistently all year.
Vehicles and home office costs have their own rules. A corporation and a sole proprietor are treated differently, and passenger vehicles have a cost limit on the ITC. Check the CRA's ITC eligibility rules or ask us before you claim the GST/HST on a vehicle purchase.
What receipts do I need to claim an ITC?
You need a receipt or invoice with enough detail before you make the claim. The detail required depends on the total amount of the purchase, including tax.
Information on the receipt | Under $100 | $100 to $499.99 | $500 or more |
Supplier's business name | Yes | Yes | Yes |
Invoice date | Yes | Yes | Yes |
Total amount paid or payable | Yes | Yes | Yes |
GST/HST charged, or a note that the price includes it | No | Yes | Yes |
Supplier's GST/HST registration number | No | Yes | Yes |
Your business name | No | No | Yes |
Short description of what you bought | No | No | Yes |
Terms of payment | No | No | Yes |
A few habits that protect your claims:
Keep the receipt, not just the card statement. A credit card statement usually does not show the supplier's GST/HST number.
Check the supplier's number when a bill looks unusual. The CRA has a free GST/HST registry to confirm it.
Use the total with tax to pick the tier. A $460 purchase plus 13% HST comes to $519.80, so it needs the full $500 detail.
How long do I have to claim a missed ITC?
Most businesses have about four years. You can claim a missed ITC on any later return filed by the due date of the return for the last reporting period that ends within four years after the period in which you could first have claimed it.
For example, a quarterly filer who bought equipment in January 2026 (the January to March 2026 quarter) can claim that ITC on any return filed by April 30, 2030. There is no need to amend the old return.
The limit is two years for listed financial institutions and for some larger businesses (more than $6 million in taxable sales for two years in a row, where less than 90% of their supplies are taxable).
Missed ITCs are money left on the table. Reviewing the GST/HST account every month is part of monthly bookkeeping, so missing or doubled claims are caught early.
With Remote Bookkeeping, you build your own plan and pay only for what you need. HST/GST filing is one of the modules you can add, at published prices that are the same across Canada. See what each service includes.
Frequently asked questions
Can I claim the HST on my bookkeeping fees?
Yes, unless you use the Quick Method. Accounting and other professional fees are on the CRA's list of eligible expenses, so a registered business using the regular method can claim the GST/HST charged on its bookkeeping bill. See how much bookkeeping costs in Canada.
Can I claim ITCs on things I bought before I registered?
In some cases. A new registrant who was a small supplier may claim ITCs on capital property, real property and inventory on hand on the day of registration. The GST/HST on services used before registration cannot be claimed.
Can I claim HST charged in another province?
Yes. You can claim the HST paid on a purchase made in a participating province for use in your business, even if your business is not located in that province.
How does an ITC show up in QuickBooks Online?
When a bill is entered with the right sales tax code, QuickBooks Online posts the expense before tax and sends the GST/HST to the sales tax account. The ITCs then flow into the GST/HST return report, so the expense and the tax are never mixed.
Sources
About Remote Bookkeeping
Remote Bookkeeping is a Canadian-owned firm founded by Lia and George, with more than 30 years of combined experience. We provide monthly bookkeeping, financial reporting, payroll, HST/GST filing, year-end preparation and QuickBooks Online setup for small businesses across Canada. Call (289) 867-0808 or 1-800-880-9141, or contact us. Related reading: When Does a Canadian Small Business Have to Register for GST/HST?
This article is general information for Canadian small business owners. It is not tax, legal or accounting advice for your particular situation. Rates and thresholds change - always confirm against the source linked above or ask us.
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