Can my Ontario business claim HST back on a vehicle purchase?

Yes, but with important restrictions depending on the type of vehicle. For vehicles used exclusively or primarily (more than 50%) for business purposes, you can claim an ITC for the HST paid on the purchase.

However, for "passenger vehicles" — the CRA's term for most personal-style cars and light trucks — the ITC is limited. The maximum capital cost allowed for income tax purposes sets an upper limit on the vehicle's cost for ITC purposes too. If you buy a luxury car worth more than the prescribed limit, the ITC is calculated only on the capped amount. Additionally, any personal-use percentage of the vehicle reduces the ITC proportionally.

Commercial vehicles — cube vans, larger trucks, cargo vans used exclusively for carrying goods or tools — face fewer restrictions and can generate fuller ITCs. Leased vehicles follow a similar approach: the ITC on lease payments is prorated for business use and may also be capped.

Documenting your business use is essential. The CRA commonly asks for mileage logs in audits involving vehicle expenses. If you cannot demonstrate the business-use percentage, the ITC may be partially or fully denied.