How do I handle HST on property I use for both business and personal purposes?

When you purchase property — a vehicle, a home office, equipment — that you use for both business (commercial) and personal purposes, you can only claim an ITC for the portion attributable to business use. You must estimate the percentage of business use and apply that percentage to the HST paid.

For example, if you buy a laptop for $1,500 plus $195 HST and use it 70% for business, your ITC is $136.50 (70% of $195). The remaining 30% is a personal cost with no ITC. You should document your business-use percentage at the time of purchase and update it if the use changes significantly.

For personal-use property subsequently converted to business use, or business property converted to personal use, there are deemed supply and deemed acquisition rules that can trigger either an ITC or a tax liability. Passenger vehicles have additional restrictions — the ITC is capped based on a prescribed maximum cost for capital cost allowance purposes. CRA's guidance distinguishes capital property (long-lived assets) from current expenses, and the rules for each differ slightly. If mixed-use property is significant in value, getting advice on how to apportion correctly is worthwhile.