Input tax credits explained

Once you are registered for GST/HST, you charge tax on your sales and send it to CRA. But you don't send all of it. You first take off the GST/HST you paid on business purchases. That is an input tax credit, or ITC.

A simple example

• You invoiced $50,000 of work in Ontario and charged $6,500 HST.
• You paid $1,300 HST on materials, tools and software for the business.
• You send CRA $6,500 minus $1,300: $5,200.

If your credits are bigger than the tax you charged, CRA refunds the difference.

What you can claim

• GST/HST on things you buy to run the business: materials, tools, equipment, software, fuel, phone, rent.
• Only the business share of things you also use personally, like a vehicle or phone.
• Only half the GST/HST on meals and entertainment.

What you can't claim

• Tax you paid before your registration date (with some exceptions for things you still have).
• PST or RST. These are part of the cost. QST has its own refund system through Revenu Québec.
• Tax on purchases for exempt sales or personal use.

Keep the receipt

You need a receipt with the right details to back up each claim. See What a receipt needs for CRA. You generally have four years to claim an ITC you missed.

What CollabNorth does

When you record an expense with GST/HST paid, CollabNorth counts the credit for you, but only for dates when you are registered, only half for meals, and never for PST. The Set aside card on Home and Tax time uses that total. See What to set aside, and why 25%.

This is general information to help you keep your own records. It is not tax or legal advice.

Based on: CRA: Input tax credits

Last checked: 2026-10-12