Calculate input tax credits - ITC eligibility percentage
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Calculate input tax credits (ITC) – ITC eligibility percentage
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- Determine the ITC eligibility percentage
- Determine the types of purchases and expenses
- Determine the percentage of use in commercial activities
- Choose a method to calculate ITCs
Determine the ITC eligibility percentage
Determine the ITC eligibility percentage (does not include reimbursements or allowances)
The following sections provide details on the ITC eligibility percentage for different type of expenses:
Note
Most charities are limited in the ITCs that they can claim because of the special calculation method called "net tax calculation for charities" that they must use to fill out their GST/HST returns. However, the rules outlined in this section apply if the charity has elected not to use the net tax calculation method.
Operating expenses
The following charts identify the different percentages of the amount of GST/HST paid or payable you can claim as an ITC on most operating expenses that relate to your commercial activities. In certain situations, there are restrictions on the amount that you can claim as an ITC. For more information, see the following charts:
ITC eligibility on operating expenses (other than meals and entertainment)
|
Percentage of use in commercial activities |
ITC eligibility for most businesses (including charities that have elected not to use the net tax calculation) |
ITC eligibility for financial institutions Footnote 1 |
|---|---|---|
| 90% or more | 100% | % of use |
| More than 10% and less than 90% | % of use | % of use |
| 10% or less | No ITCs | % of use |
If you have both commercial activities and non-commercial activities (such as exempt supplies), and at least 90% of an operating expense cannot reasonably be allocated to either your commercial or your non-commercial activities, you apportion the GST/HST paid or payable for the property or service between these two activities for ITC purposes. You can generally claim ITCs only for the part of the GST/HST paid or payable for the property or service that relates to the consumption or use in your commercial activities.
Example - Apportion of commercial activities and non-commercial activities
You own a building in Nova Scotia where you operate your retail store (a commercial activity), and you rent an apartment on the upper floor to a residential tenant on a long-term basis (an exempt activity). The rent includes utilities. Your utility bill for the building that is used for both commercial and exempt activities includes $80 HST. If all other conditions for claiming an ITC are met and you use a fair and reasonable allocation method to determine that 70% of the utility bill relates to the store and 30% to the apartment, you can claim an ITC for 70% of the HST you pay on your utility bill:
$80 (HST) × 70% = $56 (ITC)
You own a building in Nova Scotia where you operate your retail store (a commercial activity), and you rent an apartment on the upper floor to a residential tenant on a long-term basis (an exempt activity). The rent includes utilities. Your utility bill for the building that is used for both commercial and exempt activities includes $80 HST. If all other conditions for claiming an ITC are met and you use a fair and reasonable allocation method to determine that 70% of the utility bill relates to the store and 30% to the apartment, you can claim an ITC for 70% of the HST you pay on your utility bill:
$80 (HST) × 70% = $56 (ITC)
The method you use to determine the percentage that an operating expense is used in your commercial activities has to be fair and reasonable, and used consistently throughout the year.
- Footnote 1
-
Financial institutions must use 100% of an expense in commercial activities before they can claim a full ITC. However, they can claim a partial ITC even when they use less than 10% of an expense in commercial activities.
The ITC rules that apply to financial institutions are explained in GST/HST Memorandum 17-11, Determining Whether a Financial Institution is a Qualifying Institution for Purposes of Section 141.02, GST/HST Memorandum 17-12, Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02 and GST/HST Memorandum 17-13, Application of Section 141.02 to Financial Institutions That Are Qualifying Institutions.
ITC eligibility on meals and entertainment expenses
The following chart identifies the different percentages of the amount of GST/HST paid that you can claim as an ITC on reasonable meals and entertainment expenses that relate to your commercial activities.
| ITC eligibility for most businesses | ITC eligibility for charities and public institutions | Long-haul truck drivers |
|---|---|---|
| 50% | 100% | 80% |
ITC eligibility on club memberships
You are not eligible to claim an ITC in respect of the GST/HST paid or payable on a membership, or on a right to acquire a membership, in a club the main purpose of which is to provide dining, recreational or sporting facilities. However, you can claim an ITC if the membership or right is acquired by you exclusively for supply in the ordinary course of your business of selling such memberships or rights.
For more information, see GST/HST Memorandum 8-2, General Restrictions and Limitations.
| Examples | Then |
|---|---|
| A GST/HST registrant purchases memberships to a tennis club for $10,000 plus $500 GST. The memberships are acquired exclusively for purposes of selling them to clients in the ordinary course of the registrant's business of selling such memberships. | The GST/HST registrant is entitled to claim an ITC of $500, provided all other ITC requirements are satisfied. |
| A GST/HST registrant purchases a golf club membership. | The GST/HST registrant is not eligible to claim an ITC with respect to the GST/HST paid on this membership. |
ITC eligibility on expenses charged to procurement cards
Procurement cards or purchasing cards are charge cards with pre-set spending limits. These cards allow your employees to make business purchases more efficiently than through the normal purchase order or invoice cycle.
The statements and reports provided by the procurement card or corporate credit card issuers might not provide enough information about your purchases to support your claim for ITCs.
Provided certain conditions are met, eligible registrants can apply to the CRA to use ratios to claim ITCs for individual purchases under $1,000 made using procurement cards.
In cases where the documentary requirements are not satisfied, ITC cannot be claimed until the GST/HST registrant obtains additional supporting documentation to establish the particulars of the purchases, or obtains an exemption from the documentary requirements.
The CRA will permit GST/HST registrants to use factors for calculating ITCs on expenses charged to procurement cards and corporate credit cards provided they satisfy certain conditions.
For more information on expenses charged to procurement cards, see GST/HST NOTICE199, Procurement cards – Documentary Requirements for Claiming Input Tax Credits.
Capital personal property expenses
The following charts identify the different percentages of the amount of GST/HST paid or payable you can claim as an ITC on most capital personal property that relate to your commercial activities. The type of vehicle you purchase can affect the calculation to claim your ITCs. For more information, see the following charts:
| Percentage of use in commercial activities | Corporations and public service body | Partnerships and individuals |
Financial institutions |
|---|---|---|---|
| More than 50% | 100% | 100% | % of use |
| 50% or less | None | None | % of use |
|
Percentage of use in commercial activities |
Corporations and public service bodies | Partnerships and individuals | Financial institutions |
|---|---|---|---|
| 10% or less | None | None | % of use |
| More than 10% and less than 50% | None | CCA Footnote 2b | % of use |
| More than 50% and less than 90% | 100% | CCA Footnote 2b | % of use |
| 90% or more | 100% | 100% | % of use |
- Footnote 2a
-
You cannot claim an ITC for the portion of:
- the purchase price over $38,000 for a passenger vehicle
- if you are renting the passenger vehicle, the limit is $1,100 per month
- the purchase price over $61,000 for a qualifying zero-emission vehicle
* The part of the cost of passenger vehicles eligible for an ITC is limited to the capital cost limitation. The capital cost limitation is:
- $38,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in 2025.
- $37,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in 2024.
- $36,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in 2023.
- $34,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in 2022.
- $30,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in 2021.
**The part of the cost of zero-emission passenger vehicles eligible for an ITC is limited to the capital cost limitation. The capital cost limitation is:
- $61,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in 2023.
- $59,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in 2022.
- $55,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in 2021.
- Footnote 2b
-
If you use the vehicle or aircraft in both commercial and non-commercial activities, only the part of the CCA attributable to the commercial activities can be used to calculate your ITC. To determine the percentage of commercial use, see Automobile Benefits Online Calculator. You usually calculate your CCA (class 10.1) for income tax purposes at the end of your fiscal year.
**CCA is the capital cost allowance for income tax purposes. You determine your ITC annually using the following calculations:
For tax years starting on or after April 1, 2025:
- CCA x 5/105, if you paid the GST
- CCA x 13/113, if you paid 13% HST in Ontario
- CCA x 14/114, if you paid 14% HST in Nova Scotia
- CCA x 15/115, if you paid 15% HST in New Brunswick, Newfoundland and Labrador, or Prince Edward Island
For tax years ending on March 31, 2025:
- CCA x 5/105, if you paid the GST
- CCA x 13/113, if you paid 13% HST in Ontario
- CCA x 15/115, if you paid 15% HST in New Brunswick, Newfoundland and Labrador, Nova Scotia, or Prince Edward Island
If you paid the provincial part of the HST for a vehicle or aircraft after you brought it into a participating province from another participating province with a lower HST rate, you can claim an ITC based on the difference between the rates, using the following calculations:
- CCA x 2/102, for a vehicle or aircraft brought into New Brunswick, Newfoundland and Labrador, Nova Scotia, or Prince Edward Island from Ontario
If you paid the provincial part of the HST for a vehicle or aircraft after you brought it into a participating province from a non-participating province or imported it into Canada for business purposes, you can claim an ITC by using the following calculations:
For tax years starting on or after April 1, 2025:
- CCA x 8/108, for a vehicle or aircraft brought into Ontario
- CCA x 9/109, for a vehicle or aircraft brought into Nova Scotia
- CCA x 10/110, for a vehicle or aircraft brought into New Brunswick, Newfoundland and Labrador, or Prince Edward Island
For tax years ending on or after October 1, 2016:
- CCA x 8/108, for a vehicle or aircraft brought into Ontario
- CCA x 10/110, for a vehicle or aircraft brought into New Brunswick, Newfoundland and Labrador, Nova Scotia, or Prince Edward Island
- Footnote 2c
-
Financial institutions must use 100% of an expense in commercial activities before they can claim a full ITC. However, they can claim a partial ITC even when they use less than 10% of an expense in commercial activities. The ITC rules that apply to financial institutions are explained in GST/HST Memorandum 17-11, Determining Whether a Financial Institution is a Qualifying Institution for Purposes of Section 141.02, GST/HST Memorandum 17-12, Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02 and GST/HST Memorandum 17-13, Application of Section 141.02 to Financial Institutions That Are Qualifying Institutions.
Capital real property expenses
The following chart identifies the different percentages of the amount of GST/HST paid or payable you can claim as an ITC on most capital real property that relate to your commercial activities.
|
Percentage of use in commercial activities |
Corporations and partnerships Footnote 3c | Individuals Footnote 3a | Public service bodiesFootnote 3b | Financial institutions |
|---|---|---|---|---|
| 10% or less | None | None | None | % of use |
| More than 10% and less than 50% | % of use | % of use Footnote 3a | None | % of use |
| More than 50% and less than 90% | % of use | % of use | 100% Footnote 3b | % of use |
| 90% or more | 100% | 100% | 100% | % of use |
- Footnote 3a
-
Individuals cannot claim an ITC if the property is used more than 50% for their personal use or that of a related individual.
- Footnote 3b
-
Where a public service body (PSB) is determining ITCs for real property for which it has not made an election. If the PSB has made the election, see the column for Partnerships and corporations. To make the election use Form GST26, Election or Revocation of an Election by a Public Service Body to Have an Exempt Supply of Real Property Treated as a Taxable Supply.
- Footnote 3c
-
Financial institutions must use 100% of an expense in commercial activities before they can claim a full ITC. However, they can claim a partial ITC even when they use less than 10% of an expense in commercial activities. The ITC rules that apply to financial institutions are explained in GST/HST Memorandum 17-11, Determining Whether a Financial Institution is a Qualifying Institution for Purposes of Section 141.02, GST/HST Memorandum 17-12, Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02 and GST/HST Memorandum 17-13, Application of Section 141.02 to Financial Institutions That Are Qualifying Institutions.
Determine the ITC eligibility percentage for reimbursements or allowances to an employee, partner, or volunteer
You may be eligible to claim an ITC in respect of an amount reimbursed or an allowance paid to employees, partners, or volunteers for the acquisition of property or services for use related to your commercial activities.
- food, beverages, and entertainment
- parking
- supplies
- union, professional, or similar dues
- motor vehicle expenses (for example, fuel, maintenance and minor repairs, insurance, license, registration)
- work space in home (for example, electricity, heat, water, maintenance)
Where an allowance or a reimbursement is paid for a qualifying item that is subject to the point-of-sale rebate for the provincial part of the HST, no ITC may be claimed for the provincial part of the HST that has been rebated.
ITC eligibility on reimbursements
You can generally claim ITCs for the GST/HST included in reimbursements you pay to your employees or the partners in your partnership for expenses they incurred in Canada on your behalf for your commercial activities.
If you are a charity or public institution, you may also be able to claim ITCs for the GST/HST included in reimbursements you pay to your volunteers for expenses incurred on your behalf that relate to your commercial activities.
For more information, see GST/HST Memorandum 9-4, Reimbursements.
ITC eligibility on allowances
Generally, you are considered to have paid the GST/HST on a reasonable allowance you pay to your employees or partners (or volunteers if you are a charity or a public institution) if all of the following conditions are met:
- The allowance is used to pay GST/HST-taxable (other than zero-rated) expenses and at least 90% of the expenses are incurred in Canada, or the allowance is for the use of a motor vehicle in Canada.
- The allowance is or would be deductible for income tax purposes.
- The expenses incurred by your employees, partners, or volunteers would have been eligible for ITCs if you had incurred them.
For more information, see GST/HST Memorandum 9-3, Allowances.
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2026-02-03