Input Tax Credit (ITC) Calculator

What is an Input Tax Credit (ITC)?

An input tax credit (ITC) is the amount of GST/HST a registered business can recover on the purchases it makes in the course of its commercial activities. Every registrant collects GST/HST from customers on taxable sales, and separately pays GST/HST on the things it buys — inventory, supplies, equipment, rent, professional fees. Rather than that tax accumulating at each stage of a supply chain, the registrant nets the two figures against each other each reporting period:

Net GST/HST remittance = GST/HST collected on sales − Input tax credits (ITCs) claimed on purchases.

If ITCs exceed the tax collected in a period, the business gets a refund from the Canada Revenue Agency (CRA); if tax collected exceeds ITCs, the business remits the difference. This design means GST/HST is ultimately only borne by the final, non-registered consumer — registered businesses in between are meant to be tax-neutral on their purchases, provided those purchases were used to make taxable (not exempt) supplies.

What's recoverable vs. what isn't (by province)

Recoverability depends entirely on which tax you paid — not on the province itself. The federal GST and HST fall inside the GST/HST system and are recoverable; standalone provincial sales taxes sit outside it and are not.

Worked examples

Here's the same $1,000 pre-tax business purchase made in three different provinces, and what a registrant actually keeps as a net cost after claiming everything recoverable.

In Ontario, the entire $130 of HST comes back as an ITC, so the purchase's real cost stays at the $1,000 pre-tax subtotal. In British Columbia, the $50 of GST is recoverable, but the $70 of PST is stranded — it's not part of the GST/HST system — so the effective net cost rises to $1,070. In Quebec, both the $50 GST and the $99.75 QST come back (as an ITC and an ITR respectively), so the net cost also stays at $1,000.

ITC eligibility & documentation

The CRA won't take an ITC claim on faith — it expects supporting records. Keep these rules in mind before you claim:

• Valid supplier invoice required. You need an invoice or receipt showing the supplier's name, the GST/HST amount (or a note that the price includes tax), the date, and — for purchases of $30 or more — the supplier's GST/HST registration number.
• 50% limit on meals & entertainment. Only half of the GST/HST paid on meals, beverages, and entertainment expenses is claimable as an ITC, mirroring the income-tax deduction limit on the same expenses.
• Personal-use portion is excluded. If a purchase is used partly for business and partly for personal use, you can only claim the ITC on the business-use percentage — not the whole amount.
• Purchase must relate to taxable supplies. No ITC is available on purchases used to make exempt supplies (such as most residential rent or many financial services).
• Keep records for six years. The CRA requires you to retain invoices and supporting documentation for at least six years from the end of the tax year they relate to, in case of a future audit.

For the full mechanics of charging and displaying GST/HST correctly in the first place, see our guide to GST/HST on Canadian invoices. To calculate the tax on a purchase before working out what's recoverable, use the Canadian GST/HST Calculator, or extract a pre-tax amount from a tax-inclusive total with the Reverse GST/HST Calculator. For rates, thresholds, and filing rules specific to your province, see Sales Tax by Province.

Frequently asked questions

Quick answers to the most common questions users ask.