What is Input Tax Credit?

An Input Tax Credit (ITC) is a GST/HST recovery mechanism. Registered businesses can claim back the GST/HST they paid on purchases used to make taxable supplies, eliminating tax cascading.

How ITCs work

GST/HST collected on sales        $X
- GST/HST paid on business inputs ($Y) ← ITCs
= Net remittance to CRA           $X - Y

If ITCs exceed collected tax, you get a refund.

What qualifies

ITCs can be claimed on GST/HST paid for any expense that is:

• Reasonable in amount
• Incurred for commercial activities
• Not specifically excluded (e.g., club memberships, personal use portion of vehicle)

Commonly under-claimed

• Home office expenses (utilities, internet, phone — proportional to business use)
• Vehicle expenses (proportional to business kilometres)
• SaaS subscriptions billed without obvious GST/HST line items (check the invoice)
• Conference and training fees
• Professional dues

Filing deadline

ITCs can generally be claimed up to 4 years after the tax period in which the related expense was incurred. Most businesses miss the window on smaller forgotten expenses; a periodic ITC review often recovers $2K–$8K.

Related terms