Input Tax Credits (ITCs) in Canada: A Freelancer's Guide
Input tax credits let GST/HST-registered freelancers recover the sales tax they pay on business expenses. Here's how ITCs work, what qualifies, and how to maximize your claims.
Sarah Tremblay
CPA, Tax Advisor
An input tax credit (ITC) is the mechanism that lets GST/HST-registered businesses recover the sales tax they paid on business expenses. In practice, it works like this: you collect GST/HST from clients, you pay GST/HST to suppliers, and on your GST/HST return you remit only the net amount. If your ITCs exceed your collections, the CRA owes you a refund.
Which Expenses Qualify for ITCs?
- Any business expense where GST/HST was charged by the supplier
- Equipment, technology, and capital assets used in your business
- Professional services: accountant, lawyer, consultant fees (if they charged HST/GST)
- Software subscriptions billed from Canadian companies
- Vehicle operating costs (proportional to business use)
- Office supplies, rent, utilities attributable to your business
What Does NOT Qualify for an ITC
- Expenses where no GST/HST was charged (zero-rated or exempt supplies)
- Personal portions of mixed-use expenses — only the business percentage qualifies
- Meals and entertainment — only 50% of the GST/HST paid is claimable as an ITC, matching the 50% expense deduction limit
- PST or QST — only federal GST and HST generate recoverable ITCs federally
ITC timing: you can claim ITCs in the reporting period when the expense was incurred, or in any later period within four years. If you missed claiming ITCs in a prior period, you can still claim them — as long as you have the supporting receipts.