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

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

• commercial rents
• 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 supplies (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

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:

• real property, such as land or a building
• personal property such as equipment or machinery that you use in your business
• photocopiers, computers, and cash registers
• furniture and appliances used to furnish places such as offices, lobbies, and hotel rooms
• free-standing refrigerators, ovens, and other large appliances. Built-in appliances are fixtures that are usually considered to be part of real property.

Capital property for GST/HST purposes does not include property described for income tax purposes in:

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

• Overview
• Percentage of use in commercial activities