Canadian Input Tax Credits, explained with the numbers

Last reviewed 10 November 2026

Input Tax Credits are how a Canadian business gets back the GST/HST it pays on purchases — and they are also where small businesses quietly lose money, by missing receipts that don't meet the CRA's invoice rules or claiming tax on the wrong kind of expense.

The machine in one paragraph

You charge GST/HST on sales (output tax) and pay GST/HST on business purchases (input tax). Each filing period, the Input Tax Credits on your return subtract the input from the output and you remit — or get refunded — the difference. An ITC is only available for tax paid on purchases consumed in commercial activities: sales with GST/HST on them. The exempt side — long-term residential rent, most financial services, medical services — generates no ITCs, which is why a landlord's HST on maintenance is a cost, while a consultancy's identical bill is a credit.

What qualifies, in practice

Clearly creditable: rent on commercial premises, equipment and tools, professional fees, advertising, software subscriptions, utilities for business premises, delivery costs, inventory inputs.
Partly creditable: anything with personal or exempt use — a car driven partly personally, a home office, a phone plan. Claim the commercial-use percentage and keep your working.
Never creditable: exempt-activity costs, most entertainment and club memberships, and tax paid on zero-rated-adjacent mistakes like a salary (wages carry no GST/HST — there is nothing to credit).

An Ontario consultancy, worked

A Toronto consultancy bills $80,000 + 13% HST in a quarter and spends $20,000 + HST on rent, software, subscriptions and a contractor:

Output tax collected: $80,000 × 13% = $10,400.
Input tax paid: $20,000 × 13% = $2,600 — all of it commercial, all creditable.
Net remitted: $7,800. The consultancy's clients funded the tax; the ITC returns its own share.

Same business in Quebec: the ITC covers the 5% GST part and the 9.975% QST part is recovered separately through the QST return — two credits, two filings, one bookkeeping system that must track them apart. Our Canada calculator splits the federal and provincial lines exactly this way.

The invoice rules that decide claims

The CRA's documentary requirements are stricter than most people expect. For purchases over $30 before tax, a claim needs a proper invoice showing: the supplier's GST/HST registration number, the supplier's name and address, the buyer's name, the date, and the total with the tax amount shown separately (or the HST total plus a statement of the tax rate). A card slip from a coffee shop under $30 is fine; a $900 laptop purchase paid the same way is not — you need the actual tax invoice, and "GST/HST included in price" notes have specific wording rules. Registrant numbers can be verified on the CRA's database; an invoice from an unregistered "supplier" carries no creditable tax at all.

When a receipt only shows a total with "tax included", the creditable amount is extracted by fraction: inside a 13% Ontario HST total, the tax is 13/118 of the gross; at 15%, 15/115. Check a gross figure in seconds with the reverse calculator at any province's rate.

Filing mechanics and the traps

ITCs are claimed on the return for the period in which you could first claim them — generally when the filing-period due date passes or the tax was paid, whichever is earlier. Missed ITCs can ride a later return within the adjustment window, but repeated backdating invites questions. Two traps dominate: claiming the full HST on mixed-use assets (personal-use percentages get reassessed with interest), and claiming ITCs during the pre-registration phase — only tax paid while registered, or for inventory/capital acquired just before registration under specific conditions, qualifies. The $30,000 small-supplier threshold and its mechanics are on our Canada page, alongside the province-by-province rates the ITCs follow.

Official Source: CRA — Input Tax Credits and GST/HST rates by province. Last verified: November 2026.

Input Tax Credit questions

What is an Input Tax Credit in Canada?

An ITC recovers the GST/HST a registrant paid on purchases made for commercial activities. Claimed on the GST/HST return, it is subtracted from the tax collected on sales — the difference is what gets remitted or refunded.

What invoices do I need to claim an ITC?

For purchases over $30 before tax, a proper invoice showing the supplier's GST/HST number, both parties' names, the date, and the tax amount separately stated (or the total with the rate indicated in the prescribed wording). Card slips don't qualify above the $30 line.

Can I claim ITCs on exempt-activity costs?

No. ITCs exist only for tax on purchases used in commercial (taxable) activities. Costs tied to exempt supplies — long-term residential rent, most financial services — carry no credit.

How do I claim tax when a receipt only shows the total?

Extract it by fraction: the tax inside a 13% HST total is 13/118 of the gross; at 15% it is 15/115. Our reverse calculator performs the same division at any rate and province.

Can I claim the QST part of my purchases too?

Yes, but separately: QST input refunds flow through Revenu Québec's QST return, not the federal GST/HST return. Keep federal and provincial purchase tax tracked apart if you operate in Quebec.

Last reviewed: 10 November 2026 · Methodology · Editorial standards · Report an error