Input Tax Credits (ITCs) and Input Tax Refunds (ITRs)

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As a registrant, you can generally recover the GST and QST you paid (or have to pay) on taxable property and services by claiming input tax credits (ITCs) and input tax refunds (ITRs).

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

Business inputs with regard to which you can claim ITCs and ITRs include:

  • office furniture;
  • computer systems;
  • accountants' fees;
  • taxi fares;
  • machine repair costs;
  • promotional items; and
  • tools.

To be entitled to ITCs or ITRs, you must have been a registrant during one of the following reporting periods:

  • the period in which the tax on the goods or services concerned is paid; or
  • the period in which the tax becomes payable.

Exclusions and restrictions

The making of exempt supplies, such as the supply of a long-term lease of a residential complex, is not a commercial activity. Consequently, you cannot recover the GST and QST paid on goods and services acquired in the course of such an activity.

The following do not give entitlement to ITCs or ITRs because they are not subject to GST or QST:

  • salaries and wages;
  • interest and dividends;
  • insurance premiums;
  • municipal taxes, provincial taxes (other than the QST) and federal taxes (other than the GST);
  • most charges, fines and contributions.

Likewise, you cannot claim ITCs or ITRs on goods and services acquired for personal use.

You also cannot claim ITCs and ITRs with respect to membership fees or dues paid to an association whose main purpose is to provide recreational, dining or sporting facilities (including fitness clubs, golf clubs, and hunting and fishing clubs), unless you pay the fees or dues for the purpose of selling the membership because your commercial activity consists in supplying such memberships.

Rebates for public service bodies

Under the GST and QST systems, property and services that are acquired by certain public service bodies (PSBs) and that do not give entitlement to ITCs or ITRs may nonetheless give entitlement to GST or QST rebates for PSBs.

Purchases made from suppliers outside Québec or operators of specified digital platforms

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.

Questions you should ask yourself to determine if you are entitled to ITCs or ITRs

To determine whether the goods or services you acquire entitle you to ITCs and ITRs, ask yourself the following questions:

Am I required to pay GST and QST on the good or service?

If no tax is payable, you cannot claim an ITC or an ITR.

Is the good or service intended for consumption, use or supply in the course of a commercial activity?

If the answer is yes, you can claim an ITC or an ITR. Goods and services that are consumed, used or supplied in part in the course of a commercial activity generally give entitlement to an ITC or an ITR in proportion to their commercial use.

Was I a registrant during the reporting period in which I acquired the good or service?

If the answer is yes, you can generally claim an ITC or an ITR.

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