What Can You Claim as an ITC?
Which expenses qualify for input tax credits, which are limited (meals, vehicles, home office) and which never do.
The short version
- You can claim input tax credits (ITCs) on the GST/HST paid on most purchases used to make taxable sales: supplies, inventory, equipment, rent, utilities, advertising, professional fees, fuel and repairs.
- Meals and entertainment: only 50% of the GST/HST is recoverable, matching the income tax rule.
- No ITCs on items that had no GST/HST to begin with: wages, insurance premiums, bank charges and interest, most residential rent, and purchases from unregistered suppliers.
- Mixed business and personal use: claim only the business share. Club memberships for recreation and personal living costs: nothing.
- Vehicles, home offices and buildings have their own rules; get them right, because they're where audits concentrate.
What Can You Claim as an ITC?
The principle of input tax credits fits on a napkin: if you paid GST/HST to earn taxable income, you can claim it back. The details fill a binder: things that look like business costs but carry no tax, costs that are half business and half personal, and a few categories CRA limits on purpose. Here's the item-by-item list most small businesses need.
Usually Fully Claimable
| Expense | Notes |
|---|---|
| Inventory and materials for resale or production | Claim when purchased, not when sold |
| Office supplies, software, subscriptions | Foreign digital services may charge GST/HST if the seller is registered |
| Commercial rent and utilities | Your landlord must be registered and charge tax |
| Advertising, website, marketing | Including online ads from registered platforms |
| Accounting, legal and consulting fees | For business matters |
| Equipment, tools, computers (capital property) | Full ITC when bought, if used primarily (more than 50%) in commercial activities, for most individuals |
| Repairs and maintenance | Business property |
| Fuel, parking, vehicle repairs | Business-use share |
| Freight, courier, shipping | Business shipments |
| Travel: airfare, hotels within Canada | Business travel; meals at 50% |
Which of your expenses qualify for ITCs?
Upload or list your expenses. The SmartFile sorts them into fully claimable, partly claimable and not claimable, applies the 50% and personal-use rules, and gives you the ITC total for your return.
Limited or Partial
| Expense | ITC |
|---|---|
| Meals and entertainment | 50% of the tax (100% for some exceptions, such as up to six staff events a year), adjusted on the return |
| Phone, internet, home office | Business-use share only; see home office expenses |
| Passenger vehicle (sole proprietor or partnership) | Based on the CCA you claim and the business-use share; tax on the cost above the $39,000 ceiling (2026) isn't recoverable |
| Vehicle leases | Limited for passenger vehicles in line with the income tax lease limit |
| Costs shared between taxable and exempt sales | Taxable share only |
| Real property (buildings, land) used partly in business | Depends on use and who owns it; special rules |
Not Claimable
| Expense | Why |
|---|---|
| Wages and salaries, CPP and EI | No GST/HST charged |
| Insurance premiums | Exempt (no GST/HST, though some provinces charge their own premium tax) |
| Interest and most bank charges | Exempt financial services |
| Residential rent (long-term) | Exempt |
| Purchases from small suppliers who didn't charge tax | No tax paid |
| Club memberships whose main purpose is recreation, dining or sport | Specifically excluded |
| Personal and living expenses | Not for commercial activities |
| Purchases used for exempt sales | Not for commercial activities |
| GST/HST charged in error (supplier not registered, or wrong rate) | Only tax properly payable can be claimed; ask the supplier to correct it |
| Provincial sales tax (BC, Saskatchewan, Manitoba) and QST on the GST return | Separate taxes; Quebec's QST has its own input tax refunds |
The income tax side of each expense is on business expense deductions, and the meals rule on meals and entertainment.
Purchases Before You Registered
When you register, you can claim ITCs on inventory, and on capital property, you still have and will use in commercial activities, even if bought before registration (within the time limits). Operating expenses from before registration (rent, phone, fuel) generally don't qualify. Plan big purchases around your registration date if you can.
Imports and Foreign Suppliers
- GST or HST paid to the Canada Border Services Agency on imported goods is claimable, with the customs documents.
- Digital services from foreign platforms that are registered under the simplified regime don't give you an ITC; give them your GST/HST number so they don't charge you in the first place.
- Some imported services must be self-assessed, mainly by businesses with exempt activities.
How ITCs work on the return is on input tax credits explained, and the filing steps on how to file a GST/HST return. Not registered? See do I need a GST/HST number?
Eligible ITC Questions
Can I claim an ITC on meals and entertainment?
Generally only 50% of the GST/HST, matching the income tax limit, with some exceptions such as up to six staff events a year.
Can I claim ITCs on wages or insurance?
No. Wages have no GST/HST, and insurance premiums are exempt, so there is no tax to recover.
Can I claim an ITC on a vehicle?
Sole proprietors and partnerships can claim ITCs on a passenger vehicle based on the capital cost allowance claimed and business use, limited by the passenger vehicle ceiling. Operating costs are claimable for the business-use share.
Can I claim ITCs on purchases made before I registered?
For inventory and capital property you still have and will use in your business, generally yes. For operating expenses incurred before registration, generally no.
Can I claim an ITC if a supplier charged GST/HST but is not registered?
No. Only tax that was properly payable to a registered supplier can be claimed. Check the supplier’s GST/HST number in CRA’s registry.
Sources: CRA, Input tax credits; RC4022 General Information for GST/HST Registrants. Checked October 2026. Vehicle, lease and real property ITC rules are summarized; corporations follow different capital property rules from individuals.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.