A GST/HST registrant may claim an input tax credit (ITC) for eligible GST/HST paid or payable on purchases used in commercial activities, subject to the rules and supporting records. Being a business expense alone does not make the tax automatically recoverable. An ITC is claimed on a GST/HST return; an income-tax deduction reduces business income on an income tax return. CRA: input tax credits
Expenses that may qualify
CRA lists the following as examples of expenses that may support an ITC when the conditions are met. Check the actual GST/HST charged and how you use each purchase. CRA: types of purchases and expenses
| Expense | What to check |
|---|---|
| Office supplies, business advertising, accounting or legal fees | Whether GST/HST was paid or payable and how much relates to commercial activity. |
| Commercial rent, utilities, telephone and repairs | Whether the charge relates entirely or partly to commercial activity; keep a reasonable allocation for shared costs. |
| Travel and vehicle operating costs | Whether the expense qualifies, the commercial-use portion and applicable restrictions; vehicle and meals rules can differ. |
| Computers, equipment and other capital property | Capital-property rules can differ from operating-expense rules, including for passenger vehicles. |
| Home-office expenses | Both income-tax home-office conditions and GST/HST eligibility rules can matter; do not assume every household bill has recoverable tax. |
For example, insurance and many financial services are exempt from GST/HST, so a bill for an exempt service generally has no GST/HST to claim as an ITC. A deductible expense can still include a tax component for which no ITC is available. CRA: business expenses and exempt goods and services
Check eligibility before calculating
- Registration and activity: Generally you must be registered during the reporting period in which the GST/HST was paid or became payable, and the purchase must be reasonable in quality, nature and cost for the business and acquired for consumption, use or supply in commercial activities. Eligible inputs for taxable supplies include those used to make zero-rated supplies; exempt activities generally do not support ITCs. New registrants have specific rules for some property held at registration and certain future services. CRA: ITC eligibility
- Tax and use: Identify the actual GST/HST paid or payable, not the whole invoice or a separate PST charge. Determine a fair and reasonable percentage of commercial use and keep the basis for it.
- Expense type and method: Some costs have special restrictions. CRA’s ordinary operating-expense table for most businesses generally treats 90% or more commercial use as 100% eligible, more than 10% but less than 90% by actual use, and 10% or less as no ITC. Financial institutions and some other cases differ. Meals and entertainment, capital property, charities and Quick Method users have separate rules; do not apply that table to every purchase. CRA: ITC eligibility percentages
- Documents and timing: Obtain the supporting information before claiming. Keep the invoice or other qualifying records, evidence of tax and commercial use, and check the claim deadline. The amount and type of information needed depend on the total and exceptions. CRA: ITC documentation and time limits
A mixed-use example
Suppose an eligible registered sole proprietor has a $100 ordinary operating expense plus $13 HST, and a fair allocation shows 70% commercial use. Assume no special restriction applies and the necessary records are held. The ITC is $13 × 70% = $9.10, not the full $13 and not 70% of the $113 invoice as an ITC. Save the invoice and the calculation supporting the 70% allocation. This example uses the ordinary operating-expense rule; it does not calculate an ITC for a vehicle purchase or meal. CRA: operating-expense eligibility
ITC versus income-tax deduction
For income tax, a reasonable current expense incurred to earn business income may be deductible, subject to its own rules. On Form T2125, include only the business portion and reduce the applicable expense by any ITC claimed. Capital purchases are handled separately and may be subject to capital cost allowance rules. CRA: T2125 expenses
In the example above, if the $113 expense is an otherwise deductible current expense, its 70% business share is $79.10. After the $9.10 ITC, the amount for the applicable T2125 expense line is $70.00. Eligibility for the ITC and the deduction must each be established; this does not turn the $9.10 credit into a second expense deduction.
For a vehicle used for work and personal travel, retain total and business kilometres as well as receipts; income-tax vehicle costs generally use the business proportion, and different GST/HST rules can apply to buying a capital vehicle. For income-tax home-office deductions, the workspace must be your principal place of business or be used only to earn business income and regularly to meet clients, customers or patients. A reasonable allocation can use the workspace area and, for a shared room, time; the deduction cannot create or increase a business loss. GST/HST home-office eligibility must also be checked separately. CRA: motor vehicle expenses; CRA: business use of home; CRA: ITC commercial-use rules
Claiming and keeping records
Review each purchase for eligibility, amount, allocation and documentation; then include eligible ITCs in the calculation of your GST/HST return. Check filing guidance for the return workflow. For most registrants, the claim deadline is the due date of the return for the last reporting period ending within four years after the end of the reporting period when the ITC first became available. Certain businesses and financial institutions have a two-year limit calculated differently. Do not claim an amount twice. CRA: claiming and time limits
Sources checked October 16, 2026: CRA’s ITC overview and records, eligibility percentages, and T2125 expenses.