Input Tax Credits and Input Tax Refunds

If you are registered for the GST and the QST, you may, as a rule, recover the amount of the taxes you paid on property and services that you purchased in order to sell taxable and zero-rated property or services. The GST is refunded as input tax credits (ITCs), the QST as input tax refunds (ITRs).

The term inputs refers to property or services used or consumed in the course of your commercial activities.

To be entitled to ITCs or ITRs, you must have been a registrant during the reporting period in respect of which you were required to pay the taxes.

Public service bodies

Under the GST and QST systems, public service bodies (This link will open a new window) that acquired property and services for which they are not entitled to claim ITCs or ITRs may be able to claim partial rebates of the GST and QST.

Claiming ITRs and ITCs

Most registrants claim their ITCs and ITRs when they file their GST and QST returns for the reporting period during which the purchases were made.

Example of a usual ITC and ITR claim

Sylvia is registered for the GST and the QST, and files her returns on a quarterly basis. In December 2013, she made purchases for use in the course of her commercial activities.

As most registrants do, she claimed ITCs and ITRs on the purchases in her GST/HST and QST return filed for the period from October 1, 2013, to December 21, 2013. The deadline for filing this return was January 31, 2014.

However, even if most registrants claim their ITCs and ITRs as soon as they can, they generally have four years in which to claim their ITCs and ITRs for a given reporting period. This four-year period begins on the filing deadline for the return in which they could have claimed the ITCs and ITRs.

Example of a delayed ITC and ITC claim

Sylvia is registered for the GST and the QST, and files her returns on a quarterly basis. In December 2013, she made purchases for use in the course of her commercial activities. She therefore has until January 31, 2018 (that is, the deadline for the return covering the reporting period from October 1 to December 31, 2017) to claim ITCs and ITRs on the purchases she made in December 2013.

The four-year period is reduced to two years for listed financial institutions (This link will open a new window) (other than corporations that are considered financial institutions because they made an election to deem certain supplies they make to be supplies of financial services), such as banks, insurers or trusts.

The period is also reduced for persons whose taxable sales or supplies during each of the two fiscal years preceding the fiscal year in question exceeded $6 million. However, the period is four years for charities and businesses if 90% or more of their supplies (excluding supplies of financial services) made during either of the two fiscal years prior to the fiscal year in question were taxable supplies.

Certain registrants that have claimed ITCs for HST paid in Ontario may have to recapture the portion pertaining to the provincial component of the HST paid on the purchase of certain goods and services. This measure applies to registrants whose total annual taxable supplies exceed $10 million, as well as to certain financial institutions. For more information, contact us.

Last Updated: