Input Tax Credit (Canada)

Input Tax Credits are credits applied against GST/HST collected by a business. Most businesses in Canada may register for GST/HST. Any business with a gross income of $30,000 or more is required to Register for GST/HST. (Make sure your business is not tax-exempt or zero-rated). Once you are registered and charging tax on your sales, you may also collect GST/HST on your business expenses such as, Gas, Office Supplies, Insurance, etc.

Once you’ve signed up for GST/HST, you will probably realize, you do not keep the GST/HST charges on your sales, you must remit the full reporting period amount to CRA. Your ITC’s will lower that amount that was going to be remitted to CRA.

This is all done with the GST/HST Return form that Canada Revenue Agency sends in the mail. It is recommend that you keep accurate record of your expenses (using Microsoft Excel or an Accounting Program) and the GST/HST you paid on each expense. Accurate record can save a ton of money and make your bussiness that much more successful.

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