Who Can Claim Input Tax Credits?
To claim an ITC, you must be a GST/HST registrant who acquired property or services for consumption, use, or supply in the course of your commercial activities (ETA s.169(1)).
This sounds straightforward, but three conditions must all be met:
- You are registered (or required to be registered) for GST/HST
- You paid or owe GST/HST on the acquisition
- The property or service is for use in commercial activities
The "Primarily" vs. "Exclusively" Test
The amount of ITC you can claim depends on how much of the purchase is for commercial use:
- Capital personal property: All-or-nothing. If commercial use exceeds 50%, you claim 100%. If 50% or below, you claim 0%. (ETA s.199)
- Operating expenses: Proportional. You claim ITCs based on the exact percentage of commercial use.
This distinction catches many businesses off guard. A server used 51% for commercial purposes gets a full ITC. The same server at 49% commercial use gets nothing.
Common Eligibility Mistakes
1. Claiming ITCs on exempt supplies
If you provide exempt financial services, health care, or educational services, you cannot claim ITCs on inputs related to those activities.
2. Missing the 4-year deadline
ITCs must be claimed within 4 years of the due date of the return for the period in which the tax was paid (ETA s.225(4)). For large businesses (over $6M in revenue), this window shrinks to 2 years for certain items.
3. Simplified registration vendor trap
Since July 2021, foreign digital vendors can register under a simplified GST/HST framework. Tax charged under this regime is non-recoverable as an ITC — even though it looks identical on the invoice.
Documentation Requirements
The CRA requires different documentation depending on the invoice amount:
| Invoice Amount | Required Information |
|---|---|
| Under $30 | Vendor name, date, total amount |
| $30 to $149.99 | Above + vendor GST registration number, buyer name |
| $150 and over | Above + terms of payment, description of supply, tax breakdown |
Missing even one element on a $150+ invoice means the ITC can be denied on audit.
How Input Recovery Detects These Issues
Our engine runs 29 automated checks on your AP data, including:
- Type 6: Restricted ITC detection for non-recoverable supplies
- Type 17: Missing GST/HST registration numbers on supplier invoices
- Type 18: Tier 3 documentation gaps on invoices over $150
- Type 19: Factor method miscalculation in apportionment
- Type 25: Simplified registration vendor trap detection
Upload your AP ledger to catch these issues in under 60 seconds.
Related detection types
Input Recovery automatically checks for these issues when you upload your AP data:
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