GST/HST - Find out about input tax credits, if you are eligible to claim ITCs, how to calculate ITCs, how to claim ITCs, determine the time limit to claim ITCs, and records you need to support your claimSkip to site information.
Every canadian business owner should know about input tax credits.As a gst/hst registrant, you recover the gst/hst paid or payable on purchases and expenses related to your commercial activities by claiming input tax credits (itcs).
Note that the general rules for claiming input tax credits are just like the rules for claiming any business expenses; you must have receipts to back up your claims and you can only claim input tax credits "to the extent that your purchases are for consumption, use, or supply in your commercial activities" (general information for gst/hst registrants, canada revenue agency).
To simplify compliance, form rc4531, election or revocation of an election to use the estimation and reconciliation method to report the recapture of input tax credits, allows large businesses to estimate the amount of recaptured itcs in their monthly or quarterly reporting periods and reconcile any differences between the amounts reported during the fiscal year and the actual amounts at fiscal year-end, using schedule c, reconciliation of recaptured input tax credits (ritcs), within three months of the fiscal year-end.
How long do i have to claim input tax credits?
For more information on the recapture of itcs, see gst/hst technical information bulletin b-104, harmonized sales tax – temporary recapture of input tax credits in ontario and british columbia and gst/hst info sheets gi-165, prince edward island: transition to the harmonized sales tax – builders and recaptured input tax credits and gi-171, phasing out of recaptured input tax credits in ontario.
For more information on how to calculate itcs for different type of expenses, see calculate input tax credits.
Keeping receipts for input tax creditsyou must retain all receipts in support of your itc claims in case the cra wishes to examine your records.
When you complete your gst/hst return, you declare the amount of gst/hst you collected from various customers and deduct your input tax credits (itcs) from this amount to determine your gst/hst net tax.
Normally you should claim your input tax credits for the reporting period in which you made the purchases.
If you use the quick method of accounting you cannot claim itcs for your operating expenses.
You can apply to use the quick method via your online my business account.