Operating expenses are expenses incurred to ensure the operation of a business. They include:

• fixed costs
• management costs
• costs related to the operation and support of the business
• costs incurred for the purchase of office items
• costs incurred for the rental of office space, a business or equipment
• costs related to the use of utilities

Proportion of taxes that can be claimed as input tax credits (ITCs) and input tax refunds (ITRs) on operating expenses

The table below shows the proportion of taxes you can claim as ITCs and ITRs on operating expenses based on the percentage of use in commercial activities of property or a service acquired.

Operating expenses	Percentage of use in commercial activities	Proportion of taxes that can be claimed as ITCs and ITRs – All registrants
Service or personal property (other than capital property)	≤ 10%	0%
Service or personal property (other than capital property)	> 10% to < 90%	% of use
Service or personal property (other than capital property)	≥ 90%	100%

If you carry on both commercial activities and other types of activities (e.g. you make exempt supplies), you must apportion your expenses between the two types of activities. For this purpose, you must choose a fair and reasonable allocation of expenditures method and use it consistently for at least the duration of the fiscal year. Methods based on the allocation of space, time, cost or revenue may be used under certain conditions.