Glossary / Input tax credit

How it works

Only GST/HST registrants can claim ITCs, and only for purchases used in making taxable (including zero-rated) supplies. Tax paid on purchases used for exempt supplies, such as residential rent, cannot be claimed. Purchases used partly for personal reasons are claimed only for the business share.

You need records to support each claim. The detail required rises with the amount: for purchases of $100 or more, the invoice must show the supplier's GST/HST registration number, and larger purchases need more details. Keep the invoices; the CRA can ask for them. In Quebec, the equivalent credit for QST is called an input tax refund (ITR).

Worked example: A BC web designer's purchases

A registered web designer in British Columbia buys a $2,000 computer and pays $100 GST and $140 PST. The $100 GST is an input tax credit. The $140 PST is not: PST is a provincial tax with no credit system, so it becomes part of the computer's cost.

In the same quarter the designer charges $12,000 plus $600 GST. With $100 of ITCs from the computer and $45 from software subscriptions, the net GST owing is $600 - $145 = $455.

In AcboBooks

In a Canadian company, AcboBooks posts the GST/HST column on bills and cheques to a GST/HST Paid (ITC) account. The Sales Tax Liability report then shows tax collected, input tax credits and the net owing for the period. PST, RST and QST paid on purchases are not tracked as recoverable; they stay in the expense.

Related terms

Related on this site

Sources

Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.

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Input tax credit (ITC)