Input tax credits (ITCs): what you can and can't claim

What an ITC is

When you're registered for GST/HST, you charge tax on your sales and you pay tax on most of what you buy. An input tax credit is how you get back the GST/HST you paid on business purchases. On the return, the tax you collected goes on line 103, your ITCs go on line 106, and you remit the difference (line 109). If your ITCs are larger, the CRA owes you a refund.

So every ITC you miss is money you paid the government twice: once to the supplier and again on your return. Every ITC you claim without proper support can be denied in an audit, with interest. The rules below are about getting both right.

Who can claim

You can claim an ITC when all of these are true:

• You were a GST/HST registrant in the reporting period when the tax was paid or became payable.
• You bought the goods or services for use in your commercial activities, that is, to make taxable (including zero-rated) sales.
• The expense is reasonable in nature, quality and cost for your business.
• You have the right documents before you claim (next section).

Two things never qualify: purchases for your personal use or enjoyment, and purchases you use to make exempt supplies, such as residential rent or most financial services. If something is used partly for business and partly for personal or exempt purposes, you can generally claim only the business part. For capital property, the CRA has its own percentage tests; guide RC4022 has the details.

Not registered yet? Check the GST/HST filing guide for the $30,000 small-supplier test.

What the receipt has to show

The CRA sets the information you need by the total of the sale. These thresholds were raised in 2021 from $30 and $150 to $100 and $500; older articles and the old CRA memorandum still show the previous numbers.

A card-terminal slip on its own usually isn't enough once you pass $100, because it rarely shows the supplier's GST/HST number. Ask for the itemized receipt. If a supplier's number looks wrong, you can check it in the CRA's GST/HST Registry before you claim. The rules for the invoices you issue yourself are in what a Canadian invoice must show.

Restricted and blocked items

• Meals and entertainment. Where the income tax deduction is limited to 50%, so is the ITC: you claim 50% of the GST/HST. RC4022 lets you claim 100% during the year and add back the extra half as an adjustment (line 104): monthly and quarterly filers on the first return of the next fiscal year, annual filers on the return for the same year. Charities and public institutions aren't subject to the limit.
• Passenger vehicles. Corporations use a primary-use test: more than 50% business use gives a full ITC, 50% or less gives none. Individuals and partnerships get no ITC at 10% business use or less, a full ITC at 90% or more, and in between the ITC follows the capital cost allowance they claim. Either way, the ITC is capped at the tax on the part of the cost up to the passenger vehicle limit, which is $39,000 before tax for vehicles bought in 2026 (it was $38,000 in 2025).
• Personal and mixed use. A phone, home office or vehicle used partly for personal reasons gets an ITC only for the business share, under the CRA's rules for that type of property.
• Exempt activities. If part of your business makes exempt supplies, the tax on inputs for that part can't be claimed.
• Provincial sales tax. PST in BC and Saskatchewan and RST in Manitoba are not recoverable. They stay in the cost. Quebec's QST comes back through input tax refunds on the Revenu Québec return; see the PST, QST and RST guide.
• Quick Method filers don't claim ITCs on operating expenses at all, only on capital purchases. See Quick Method vs regular method.

How long you have to claim

You don't have to claim an ITC in the period you paid the tax. For most businesses the deadline is the due date of the return for the last reporting period that ends within four years of the period the ITC belongs to. A quarterly filer who finds a missed supplier invoice from three years ago can still claim it on the current return.

The limit is two years for listed financial institutions (with some exceptions) and for certain businesses whose threshold amounts exceed $6 million. If that might be you, check the CRA's input tax credit page before relying on four years.

A worked example

An Ontario contractor (HST 13%) files quarterly. In one quarter she buys:

Her line 106 is $614.28. Had she kept only the card-terminal slip for the $678 tool purchase, the $78 would be at risk.

Tracking ITCs in AcboBooks

In AcboBooks, the GST/HST you pay on bills, cheques, expenses and credit card charges goes to a GST/HST Paid (ITC) account, separate from the GST/HST you collect. The GST/HST Return report shows lines 101, 103, 106 and 109 for any period, and File GST/HST Return records the payment or refund with the collected and ITC amounts filled in from the period. PST and RST you pay stay in the expense, and QST goes to its own refund account.

Two things to handle yourself: AcboBooks doesn't apply the 50% meals limit or the vehicle rules automatically. Either record only the claimable half of the tax as an ITC when you enter the meal, or lower the line 106 amount when you file. Attach the receipt image to the bill or cheque so the supporting document is there if the CRA asks.

Frequently asked questions