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

If you're registered for HST in Ontario, Input Tax Credits (ITCs) are how you claim back the HST/GST you paid on business expenses. Done right, ITCs reduce what you owe (or can increase a refund). Done wrong, they're one of the fastest ways to invite CRA questions.

This post explains what ITCs are, what's usually claimable, what's commonly denied, and what records you should keep so your HST return is defensible.

What is an ITC (in plain English)?

An ITC is the HST/GST you paid on eligible business purchases and expenses. You can generally claim that tax back if:

• you're registered for HST/GST, and
• the expense is for business use, and
• you have proper supporting documentation

Who this applies to

This applies to Ontario businesses that:

• charge HST on taxable sales, and
• file HST/GST returns (monthly, quarterly, or annual)

It can apply to incorporated businesses and sole proprietors.

Common ITC categories Ontario businesses usually claim

Here are common areas where ITCs often apply (depending on your situation and documentation):

• Office supplies and software
• Business phone/internet (business-use portion)
• Advertising and marketing
• Professional fees (accounting, legal)
• Business insurance
• Rent and utilities (business-use portion)
• Equipment and tools used for business
• Vehicle expenses (business-use portion, with a mileage log)
• Meals and entertainment (rules are stricter; keep clean records)

Key point: Business-use portion matters. If something is partly personal, you generally can't claim 100% of the HST.

What CRA usually wants to see (documentation)

For an ITC to hold up, you should be able to produce:

• An invoice/receipt showing supplier name
• Date of purchase
• Amount paid and HST/GST charged
• Description of what was purchased
• Proof of payment (bank/credit card statement helps)
• Notes for business-use percentage (if mixed use)

If you're missing invoices, that's where claims get weak fast.

What's risky or commonly denied

These are common problem areas:

• Claiming ITCs without proper invoices/receipts
• Claiming 100% business use on obviously mixed items (phone, vehicle, home internet)
• “Personal” spending run through the business
• Vague receipts with no vendor details
• Large purchases with unclear business purpose
• Expenses outside the reporting period (timing issues)

Mixed-use expenses (business + personal)

If an expense is partly personal, you should track and claim only the business portion. Common examples:

• Vehicle (needs a mileage log)
• Cell phone (estimate business-use % consistently)
• Home internet (business-use %)
• Home office expenses (separate topic, but same principle)

Consistency matters: CRA tends to dislike random percentages that change every period without a reason.

A simple ITC checklist before you file HST

Before you file your HST return, do this:

• Reconcile bank + credit card statements for the period
• Ensure each ITC has a matching receipt/invoice
• Separate personal vs business spending
• Confirm big purchases have clear business purpose
• Keep a clean folder (digital is fine) by month/quarter
• If unsure, don't guess—clarify first

FAQs