ITC and ITR (input tax credits)

The ITC (federal input tax credit) and the ITR (Quebec input tax refund) allow a registered business to recover the GST and QST paid on its business purchases (its “inputs”). This reduces the amount of tax the business must remit to the government by the same amount.

At a glance

ITC = Input Tax Credit (the federal portion, for the 5% GST)
ITR = input tax refund (the Quebec portion, for the 9.975% QST)
“Inputs” simply refers to your business purchases: supplies, equipment, and services
They reduce the taxes you pay to Revenu Québec; keep every invoice as proof
You generally have up to four years to claim a forgotten ITC or ITR, provided you’ve kept the invoice

Why it matters

Here’s how it works: You buy a computer for $1,000, plus $50 in GST and $99.75 in QST, for your business. Thanks to the ITC and the ITR, you get that $149.75 in taxes back instead of it being an expense. Each reporting period, you subtract the taxes paid on your purchases from the taxes collected on your sales, and you only remit the difference. Forgetting to claim them means paying more taxes than necessary; making a mistake (for example, meals are only 50% deductible) can trigger an audit. Bankeo connects you, for free, with a vetted accountant or CPA who calculates these amounts and keeps your documentation in order, and we’re here to support you every step of the way.

The ITC and the ITR are the other side of the GST and QST : On one hand, you collect tax on your sales; on the other, you claim back the tax paid on your purchases, and you only remit the difference. In a quarter where you collect $3,000 in taxes and pay $1,100 in taxes on your business expenses, you only pay $1,900. Good to know: You generally have up to four years to claim a missed credit, and our GST/QST Calculator calculates everything in a matter of seconds. The rules and required supporting documents are detailed by the Canada Revenue Agency. Don’t claim too much, and don’t leave anything out: Bankeo connects you, at no cost, with an accountant who’ll make sure everything is in order and support you every step of the way.

Frequently asked questions

What does this actually mean?

This is the process that refunds you the GST and QST paid on your business purchases. You can claim these taxes back instead of treating them as an expense, as long as the purchase is related to your business activities and you keep the invoice.

For which purchases can I claim an ITC or an ITR?

For purchases related to your business: supplies, equipment, commercial rent, and services. A valid invoice is required. Certain expenses are subject to limits; for example, meals and entertainment expenses are only 50% recoverable.

What’s the difference between ITC and ITR?

The ITC recovers the GST (5% federal tax), and the ITR recovers the QST (9.975% Quebec tax). Both are calculated together on the same return filed with Revenu Québec. Bankeo connects you with a vetted accountant or CPA at no cost to ensure nothing is overlooked, and we’re here to support you every step of the way.