Calculate input tax credits – ITC eligibility percentage


Determine the ITC eligibility percentage (does not include reimbursements or allowances)

The following sections provide details on the ITC eligibility percentage for different type of expenses:

Note

Most charities are limited in the ITCs that they can claim because of the net tax calculation for charities. However, the rules outlined in this section apply if the charity has elected not to use the net tax calculation method.

Operating expenses

The following charts identify the different percentages of the amount of GST/HST paid or payable you can claim as an ITC on most operating expenses that relate to your commercial activities. However, there are restrictions on the amount that you can claim as an ITC on certain expenses. For more information, see the following charts:

ITC eligibility on operating expenses (other than meals and entertainment)
ITC eligibility on operating expenses

Percentage of use in commercial activities

ITC eligibility for most businesses (including charities that have elected not to use the net tax calculation)

ITC eligibility for financial institutions Footnote 1

90% or more 100% % of use
More than 10% and less than 90% % of use % of use
10% or less No ITCs % of use

If you have both commercial activities and non-commercial activities (such as exempt supplies), and at least 90% of an operating expense cannot reasonably be allocated to either your commercial or your non-commercial activities, you apportion the GST/HST paid or payable for the property or service between these two activities for ITC purposes. You can generally claim ITCs only for the part of the GST/HST paid or payable for the property or service that relates to the consumption or use in your commercial activities.

See example – Apportion of commercial activities and non-commercial activities

The method you use to determine the percentage that an operating expense is used in your commercial activities has to be fair and reasonable, and used consistently throughout the year.

ITC eligibility on meals and entertainment expenses

The following chart identifies the different percentages of the amount of GST/HST paid that you can claim as an ITC on reasonable meals and entertainment expenses that relate to your commercial activities.

ITC eligibility on meals and entertainment expenses
ITC eligibility for most businesses ITC eligibility for charities and public institutions Long-haul truck drivers
50% 100% 80%
ITC eligibility on club memberships

You are not eligible to claim an ITC in respect of the GST/HST paid or payable on a membership, or on a right to acquire a membership, in a club the main purpose of which is to provide dining, recreational or sporting facilities. However, you can claim an ITC if the membership or right is acquired by you exclusively for supply in the ordinary course of your business of selling such memberships or rights.

For more information, see GST/HST Memorandum 8.2, General Restrictions and Limitations.

Examples – Club memberships
Examples Then
A GST/HST registrant purchases memberships to a tennis club for $10,000 plus $500 GST. The memberships are acquired exclusively for purposes of selling them to clients in the ordinary course of the registrant's business of selling such memberships. The GST/HST registrant is entitled to claim an ITC of $500, provided all other ITC requirements are satisfied.
A GST/HST registrant purchases a golf club membership. The GST/HST registrant is not eligible to claim an ITC with respect to the GST/HST paid on this membership.
ITC eligibility on expenses charged to procurement and corporate credit card

The statements and reports provided by the procurement card or corporate credit card issuers might not provide enough information about your purchases to support your claim for ITCs.

In cases where the documentary requirements are not satisfied, ITC cannot be claimed until the GST/HST registrant obtains additional supporting documentation to establish the particulars of the purchases, or obtains an exemption from the documentary requirements.

The CRA will permit GST/HST registrants to use factors for calculating ITCs on expenses charged to procurement cards and corporate credit cards provided they satisfy certain conditions.

For more information on expenses charged to procurement cards, see NOTICE199, Procurement cards – Documentary Requirements for Claiming Input Tax Credits.

For more information on expenses charged to corporate credit cards, see GST/HST Policy Statement P-184, Credit Card Expenses and the Registrant’s Use of Factors for Claiming Input Tax Credits.

Capital personal property expenses

The following charts identify the different percentages of the amount of GST/HST paid or payable you can claim as an ITC on most capital personal property that relate to your commercial activities. The type of vehicle you purchase can affect the calculation to claim your ITCs. For more information, see the following charts:

ITC eligibility on capital personal property (other than passenger vehicles and aircraft)
ITC eligibility on capital personal property

Percentage of use in commercial activities

ITC eligibility for most businesses (including charities that have elected not to use the net tax calculation)

ITC eligibility for financial institutions Footnote 32C 

More than 50% 100% % of use
50% or less No ITCs % of use
ITC eligibility on capital personal property of passenger vehicles and aircraft
ITC eligibility on capital personal property of passenger vehicles and aircraft

Percentage of use in commercial activities

ITC eligibility for corporations Footnote 2A and public service bodies ITC eligibility for partnerships and sole proprietorship (including charities that have elected not to use the net tax calculation) ITC eligibility for financial institutions Footnote 2C
90% or more 100% 100% % of use
More than 50% and less than 90% 100% Fraction X CCA Footnote 2B % of use
More than 10% and less than 50% No ITCs Fraction X CCA Footnote 2B % of use
10% or less No ITCs No ITCs % of use

Capital real property expenses

The following chart identifies the different percentages of the amount of GST/HST paid or payable you can claim as an ITC on most capital real property that relate to your commercial activities.

ITC eligibility on the capital real property

Percentage of use in commercial activities

ITC eligibility for individuals, corporations and partnerships  ITC eligibility for public service bodies Footnote 3B (including charities that have elected not to use the net tax calculation) ITC eligibility for Financial institutionsFootnote 3C
90% or more 100% 100% % of use
More than 50% and less than 90% % of use 100% % of use
More than 10% and less than 50% % of use Footnote 3A No ITCs % of use
10% or less No ITCs No ITCs % of use

Determine the ITC eligibility percentage for reimbursements or allowances to an employee, partner, or volunteer

You may be eligible to claim an ITC in respect of an amount reimbursed or an allowance paid to employees, partners, or volunteers for the acquisition of property or services for use related to your commercial activities.

Examples of reimbursements and allowances for which you may be eligible to claim an ITC
  • food, beverages, and entertainment
  • parking
  • supplies
  • union, professional, or similar dues
  • motor vehicle expenses (for example, fuel, maintenance and minor repairs, insurance, license, registration)
  • work space in home (for example, electricity, heat, water, maintenance)


Where an allowance or a reimbursement is paid for a qualifying item that is subject to the point-of-sale rebate for the provincial part of the HST, no ITC may be claimed for the provincial part of the HST that has been rebated.

ITC eligibility on reimbursements

You can generally claim ITCs for the GST/HST included in reimbursements you pay to your employees or the partners in your partnership for expenses they incurred in Canada on your behalf for your commercial activities.

If you are a charity or public institution, you may also be able to claim ITCs for the GST/HST included in reimbursements you pay to your volunteers for expenses incurred on your behalf that relate to your commercial activities.

For more information, see GST/HST Memorandum 9.4, Reimbursements.

ITC eligibility on allowances

Generally, you are considered to have paid the GST/HST on a reasonable allowance you pay to your employees or partners (or volunteers if you are a charity or a public institution) if you meet all of the following conditions:

  • the allowance is used to pay GST/HST taxable (other than zero-rated) expenses and at least 90% of the expenses are incurred in Canada, or the allowance is for the use of a motor vehicle in Canada
  • the allowance is or would be deductible for income tax purposes
  • the expenses incurred by your employees, partners, or volunteers would have been eligible for ITCs if you had incurred them

For more information, see GST/HST Memorandum 9.3, Allowances.

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