What business expenses can I claim as input tax credits on my Ontario HST return?
Input tax credits (ITCs) let registered HST businesses recover the HST they paid on purchases and expenses used to make taxable supplies. The key requirement is that the expense must be for commercial (business) purposes — personal use does not generate ITCs.
Common ITC-eligible expenses include: office rent, equipment and computers, office supplies, professional fees (accounting, legal), advertising and marketing, business vehicle costs (with limits for passenger vehicles), software and subscriptions, and telecommunications used for business. You must have a valid invoice with the supplier's HST number to support each ITC claim.
Restrictions apply to certain categories. Meals and entertainment are only 50% ITC-eligible (the same 50% rule that applies to income tax deductions). HST on capital personal property (like a car) is prorated if the vehicle has personal use. For businesses making both taxable and exempt supplies, ITCs must be allocated proportionally.
ITCs must generally be claimed within four years of the reporting period in which the expense was incurred — after that, the claim is statute-barred. Keeping organized records is essential; the CRA regularly audits ITC claims.
Key takeaways
- ITCs recover HST paid on business expenses used to make taxable supplies.
- Meals and entertainment ITCs are limited to 50%.
- Personal use portions of mixed-use assets reduce the ITC.
- Claims must be made within four years; valid invoices with the supplier's HST number are required.