Input Tax Credits and Input Tax Refunds
If you are registered for the GST and the QST, you can generally recover the GST and QST you paid (or have to pay) on taxable property and 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.
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. However, you generally have four years in which to claim your ITCs and ITRs for a given reporting period. This four-year period begins on the filing deadline for the return in which you could have claimed the ITCs and ITRs.
You are registered for the GST and the QST and file your returns on a quarterly basis. You made purchases in the course of your commercial activities in December 2016. You have until January 31, 2021 (that is, the deadline for the return covering the reporting period from October 1 to December 31, 2020) to claim ITCs and ITRs on the purchases you made in December 2016.
The four-year period is reduced to two years for listed financial institutions (other than corporations that are considered financial institutions because they made an election to have certain supplies they make considered to be supplies of financial services), such as banks, insurers or trusts.
The period is also reduced for persons whose taxable 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 or payable in Ontario before July 1, 2018, or in Prince Edward Island before April 1, 2021, 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, refer to the following:
- GST/HST Technical Information Bulletin B-104, Harmonized Sales Tax - Temporary Recapture of Input Tax Credits in Ontario and British Columbia;
- GST/HST Info Sheet GI-171, Phasing out of Recaptured Input Tax Credits in Ontario;
- GST/HST Info Sheet GI-165, Prince Edward Island: Transition to the Harmonized Sales Tax - Builders and Recaptured Input Tax Credits.
Since January 1, 2019, certain suppliers outside Québec and certain operators of specified digital platforms have been required to be Québec sales tax (QST) registrants and to collect QST in respect of certain taxable supplies made in Québec. Their QST registration numbers contain the letters "NR" (instead of the letters "TQ"). A list of the suppliers outside Québec who are QST registrants is available on our website.
Special rules apply where such suppliers or operators make certain taxable supplies in Québec or enable other persons to do so. For example, an input tax refund (ITR) cannot be claimed for the QST paid in respect of property or a service purchased from such a supplier or operator, even where the property or service is acquired by a registrant in the course of the registrant's commercial activities.
Such suppliers or operators are not supposed to collect the QST in respect of property or services supplied to purchasers who inform them that they are QST registrants and provide them with their QST registration numbers containing the letters "TQ".
Any QST registrant who pays QST to such a supplier or operator has to deal directly with the supplier or operator to obtain a refund of the tax.