Calculate input tax credits - Types of purchases and expenses

Overview
Determine the types of purchases and expenses
Determine the percentage of use in commercial activities
Determine the ITC eligibility percentage
Choose a method to calculate ITCs

Determine the types of purchases and expenses

The amount you can recover for any expense depends if it is considered an operating expense or a capital expense.

Operating expenses for which you may be eligible to claim ITCs

• commercial rent
• equipment rentals
• advertising (for example, ads, business cards, or flyers)
• legal, accounting, and other professional fees
• delivery, freight, and express fees
• home office expenses (restrictions apply, see Line 9945 - Business-use-of-home expenses)
• motor vehicle expenses (restrictions apply, see Motor vehicle expenses)
• maintenance and repairs
• telephone and utilities
• office expenses (such as postage, computer disks, paper, and pens)
• merchandise and inventory
• travel such as hotel, airfare, rail fare, or car rental (except expenses for meals and entertainment related to travel)
• convention fees (restrictions apply, see GST/HST memorandum 8-2 General Restrictions and Limitations)

Capital expenses for which you may be eligible to claim ITCs

Capital property, for GST/HST purposes, is based on the meaning of the term for income tax purposes and includes:

• depreciable property (property that is eligible for capital cost allowance for income tax purposes)
• other property that would result in a capital gain or capital loss for income tax purposes if you disposed of it

Examples of capital expenses for which you may be eligible to claim an ITC are:

• photocopiers, computers, and cash registers
• machinery and vehicles
• furniture and appliances
• musical instruments (only if you are an individual who is a GST/HST registrant and you use it for employment purposes or in a business carried on by a partnership of which you are a member)
• improvements to capital personal property (only if you are using the property primarily (50%) in your commercial activity

Capital property for GST/HST purposes does not include property described for income tax purposes that are categorized in the following:

• class 12 (such as chinaware, cutlery, and certain tableware)
• class 14 (certain patents, franchises, concessions, or licences for a limited period)
• proposed class 14.1 (eligible capital property)
• class 44 (a patent or a right to use patented information for a limited or unlimited period)

• Overview
• Percentage of use in commercial activities

Date modified:

2016-09-15