GST/HST on Vehicle Purchases
How ITCs work on business vehicles: passenger vehicle limits, the 90% and 50% rules, leases, benefits and selling.
The short version
- When a GST/HST registrant buys a vehicle for the business, it can recover the GST/HST through input tax credits (ITCs), but how much and when depends on the type of vehicle, who owns it and how much it's used for business.
- Passenger vehicles (cars, SUVs, most pickups used for passengers) are limited: no ITC on the part of the price above the capital cost ceiling ($39,000 plus tax for 2026, $61,000 for zero-emission vehicles).
- Sole proprietors and partnerships claim the full ITC up front only if the vehicle is used 90% or more for business. Otherwise they claim ITCs year by year, in step with the capital cost allowance they claim.
- Corporations claim the full ITC (up to the ceiling) if the vehicle is used more than 50% for business, and none if not.
- Selling a vehicle you claimed ITCs on is usually a taxable sale; personal use by owners and employees can trigger GST/HST on the taxable benefit.
GST/HST on Vehicle Purchases
A business vehicle is often the second-largest purchase a small business makes, and the GST/HST on it is real money: $7,800 of HST on a $60,000 truck in Ontario. Whether you get it all back, part of it, or most of it slowly over years depends on rules that most dealers can't explain at the desk. Here they are.
Passenger Vehicle or Motor Vehicle?
| Type | Examples | ITC limits |
|---|---|---|
| Passenger vehicle | Cars, minivans, most SUVs, pickups mainly used to carry passengers | Capital cost ceiling and use-based rules |
| Other motor vehicle | Pickups and vans used more than 50% to transport goods or equipment, cargo vans, trucks, vehicles seating more than 9 people | Normal capital property rules; no ceiling |
The definition follows the income tax rules. A crew-cab pickup that hauls tools and materials to job sites most of the time is often not a passenger vehicle; the same truck used mostly for commuting is. Keep a log; see the mileage log guide.
Buying a vehicle for the business?
Enter the vehicle type, price, province, how you'll use it and whether you're incorporated. The SmartFile works out the ITC you can claim now, the ITC over future years, and the income tax CCA.
ITCs on a Passenger Vehicle
| Owner | Business use | ITC |
|---|---|---|
| Sole proprietor or partnership | 90% or more | Full ITC at purchase, on the price up to the ceiling |
| Sole proprietor or partnership | Under 90% | No ITC at purchase; each year, an ITC equal to the tax fraction of the CCA claimed for the vehicle |
| Corporation | More than 50% | Full ITC at purchase, on the price up to the ceiling |
| Corporation | 50% or less | No ITC |
Example: a sole proprietor in Ontario buys a $48,000 SUV used 70% for business. No ITC at purchase. Each year, the ITC is about 13/113 of the CCA claimed on it (CCA is based on the $39,000 ceiling and the business-use share). It works out to roughly the business-use share of the HST on the ceiling, recovered over the life of the vehicle. The income tax side is on vehicle expenses.
Leases and Operating Costs
- Leases: ITCs on lease payments for a passenger vehicle are limited in line with the income tax lease limit ($1,100 a month before tax for leases from 2025), and the business-use share.
- Fuel, repairs, insurance: ITCs on the business-use share of taxable operating costs. Insurance is exempt, so no ITC; see what can you claim as an ITC?
- Zero-emission vehicles: the higher $61,000 ceiling applies, which raises the ITC limit too.
Personal Use by Owners and Employees
When an employee or shareholder gets a taxable benefit from using a company vehicle (standby charge, operating cost benefit), the employer generally must remit GST/HST on that benefit, calculated with a prescribed percentage, on the return for the period that includes the last day of February of the following year. Sole proprietors don't have this rule; their personal use reduces their ITCs instead. How the benefit itself is calculated is on corporate vehicle expenses.
Selling or Trading In the Vehicle
- A registrant who claimed ITCs on a vehicle generally charges GST/HST when selling it, including on a trade-in to a dealer.
- A sole proprietor using a passenger vehicle less than 90% for business may be treated differently on sale; the tax collected follows how the ITCs were claimed.
- Trading in a vehicle you used personally (no ITCs) reduces the tax on the new one; see GST/HST on used goods.
Records
- The bill of sale or lease, showing the GST/HST and the dealer's GST/HST number.
- A mileage log for business-use percentage.
- CCA schedules each year, if ITCs follow the CCA.
The broader ITC rules are on input tax credits explained, and depreciation on capital cost allowance explained. Back to the GST/HST guide.
Vehicle GST/HST Questions
Can I claim the HST on a business vehicle?
Usually, if you are a GST/HST registrant and use it for business. For passenger vehicles the ITC is limited to the tax on the capital cost ceiling, and the timing depends on business use and whether you are incorporated.
What is the capital cost limit for a passenger vehicle in 2026?
$39,000 plus tax for most passenger vehicles and $61,000 for zero-emission passenger vehicles. GST/HST on the price above the limit cannot be claimed.
Do sole proprietors get a full ITC on a car?
Only if the car is used 90% or more for business. Otherwise the ITC is claimed each year based on the capital cost allowance claimed.
Is a pickup truck a passenger vehicle?
It depends on use. A pickup used more than 50% to transport goods or equipment is generally not a passenger vehicle, so the ceiling does not apply.
Do I charge GST/HST when I sell my business vehicle?
Generally yes, if you are a registrant and claimed input tax credits on it.
Sources: CRA, RC4022 General Information for GST/HST Registrants (passenger vehicles); About the GST/HST on benefits; Guide T4002, Chapter 4. Checked October 2026. The 2026 ceiling of $39,000 was announced for vehicles bought in 2026; CRA's guide we checked still showed the 2025 figure of $38,000. The year-by-year ITC calculation for vehicles used under 90% is simplified.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.