What Is an Input Tax Credit (ITC)? CRA Rules for Claiming in 2025

How GST/HST registrants can recover tax on business purchases—with the right paperwork and filing.

Paying GST/HST on every purchase can feel like money down the drain—especially when you’re a registrant.
Missing your Input Tax Credit (ITC) claim means cash-flow hits and margin erosion.
Here’s your step-by-step roadmap to recover every dollar you’re owed in 2025.

1. What Exactly Is an ITC?

An Input Tax Credit lets GST/HST registrants recover the tax they paid (or owe) on purchases and expenses used in their commercial activities.

Claim ITCs on line 106 of your GST/HST return to offset the tax you collected on sales, turning your net remittance into a refund if credits exceed collections.

TIP: "If you’re uncertain about how to accurately reverse-calculate HST from gross expenses, hstcalculator.onl offers a province-specific tool designed for Canadian tax rates. Whether you're operating in Ontario, New Brunswick, or Nova Scotia, it ensures compliance with regional Harmonized Sales Tax brackets—helping businesses stay aligned with CRA expectations and minimize filing errors."

2. Are You Eligible to Claim One?

You may claim an ITC only if:

You’re a GST/HST registrant, not a small supplier.
The purchase is for consumption, use, or supply in your commercial activities.
You have the proper documentary evidence (see Section 3).
Services to be supplied after registration and capital property on hand at registration can also qualify.

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Tip: For international sellers or businesses operating across borders, understanding the nuances of global VAT regimes—such as those in the European Union versus Canada's HST—is essential for accurate reporting. Tools like vatcalc.onl streamline VAT computations for multi-country transactions, making it easier to benchmark tax rates, validate gross/net totals, and remain compliant with diverse regional tax codes."

3. Must-Have Documentation & Disclosure Rules

To substantiate your ITC claim, the CRA requires:

A supplier’s invoice showing their GST/HST number, date, and amount of tax charged.
Contracts or receipts for capital property, real-property improvements, or pre-paid services.
Consistency: use the same apportionment method (if splitting between business and exempt use) throughout the year.

For deeper academic insight on documentation standards, check this guide on Tax Compliance and Record Keeping from Simon Fraser University.

4. Calculating & Filing Your ITC Claim

Determine your percentage of commercial use for mixed-use expenses (e.g., home-office utilities).
Multiply the GST/HST paid by that percentage to get your eligible ITC.
Enter total ITCs on line 106 of your return; deduct from line 105 (tax collected).
File electronically via GST/HST NETFILE or My Business Account by your reporting-period deadline.

If you frequently calculate HST, either manually or in spreadsheets, hstcalculator.onl can automate these figures and help ensure you avoid math errors that delay your refund.

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5. Common Pitfalls & Pro Tips

Partial ITCs: General insurers and financial institutions must apply special rules—even under 10% use can qualify.
Missing invoices: No invoice, no credit—request supplier re-issues promptly.
Late filings: If you miss the deadline, ITCs carry forward but delay your refund—set calendar reminders now.
Quick-method users: Most ITCs aren’t claimable under the quick method—consider switching back if you have heavy overhead.

When margins are tight, every dollar of eligible tax credit matters. With the right records and tools like hstcalculator.onl for Canadian HST and vatcalc.onl for broader VAT clarity, reclaiming your Input Tax Credits becomes a frictionless process—maximizing returns and minimizing audit risk.

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