Input Tax Credits (ITCs) in Ontario: What You Can Claim on Your HST Return (and What You Can't)

If you're registered for HST/GST in Ontario, Input Tax Credits (ITCs) are how you recover the HST you pay on eligible business expenses. When ITCs are tracked properly, they reduce what you owe (or increase your refund). When they're tracked poorly, they create CRA questions.

This post breaks down ITCs in plain English and gives you a clean checklist you can follow.

What is an ITC (simple definition)

An ITC is the HST/GST you paid on eligible business purchases and expenses that you can claim back on your HST return.

Think of it like this:

• You collect HST from customers (that's not your money)
• You pay HST on business expenses
• On your return, you report both and claim ITCs where allowed

What you usually can claim as ITCs (common examples)

Many Ontario small businesses can often claim ITCs on:

• Office supplies and software subscriptions
• Professional fees (accounting, legal)
• Advertising and marketing costs
• Business insurance
• Rent for business space (if HST is charged)
• Business phone/internet (business-use portion)
• Fuel and vehicle expenses (business-use portion, with proper support)
• Tools and equipment used for business (with invoices)

Key rule: you need proper documentation.

What you usually can't claim (or needs extra care)

Common ITC problems come from:

• Personal expenses (even if paid from the business account)
• Missing invoices/receipts
• Receipts without HST shown
• Expenses that are partly personal (vehicle, phone, home internet) without a consistent method
• Meals and entertainment (allowed in some cases but often misunderstood; keep strong support)
• Large assets/equipment where the rules get more complex (keep documentation and do it properly)

If you're not sure, don't guess—this is where CRA questions start.

The #1 ITC rule CRA cares about: documentation

To claim an ITC, you generally want invoices/receipts that show:

• Supplier name
• Date
• Amount paid
• HST/GST amount (or HST included clearly)
• Description of what you bought
• Your business purpose (especially for anything that could look personal)

If your receipts are weak, your ITCs are weak.

ITCs and mixed-use expenses (vehicle, phone, home internet)

Many small businesses have mixed-use expenses.

Best practice:

• Pick a reasonable business-use percentage
• Apply it consistently
• Keep support (mileage log for vehicle, usage notes for phone/internet)

A simple ITC checklist (Ontario small business)

Before filing HST, confirm:

• Bank + credit cards reconciled for the period
• All expenses are categorized (not sitting in “uncategorized”)
• Receipts are saved for major expenses
• Personal spending is separated or clearly marked
• Mixed-use expenses have a consistent method
• You can explain any unusual transactions

Common ITC mistakes (Ontario)

• Claiming ITCs on personal purchases
• Claiming ITCs without invoices
• Not tracking HST paid separately (numbers don't tie)
• Missing ITCs because receipts weren't saved
• Not reconciling accounts before filing
• Guessing totals at the deadline

FAQs