When you're running a business, it's important to keep track of your expenses. This includes the money you spend on goods and services that are related to your business. If you're registered for Goods and Services Tax (GST) or Harmonized Sales Tax (HST), you can claim input tax credits (ITCs) for some of these expenses. In this post, we will discuss what input tax credits are, and how you can claim them!
Input tax credits (ITCs) are a type of tax credit available to businesses that are registered for GST or HST. ITCs allow you to reduce the amount of taxes your business must pay by claiming refunds for the GST or HST you paid on expenses related to your business.
In order to claim ITCs, you must be able to show proof of payment and supply details about the purchase. All receipts, invoices, and other documents associated with the transaction must be kept in case they are requested by the Canada Revenue Agency (CRA).
The types of purchases eligible for ITCs vary depending on which province your business is located in. Generally speaking, most goods and services purchased for use in the business are eligible, such as office supplies, electricity, and gas, advertising costs, telephone services, insurance premiums, and rent or lease payments.
You can claim ITCs when you file your GST/HST return. Depending on how often you have to remit taxes (either quarterly or annually), you will need to calculate the amount of ITCs available for each period. If the total credits are higher than your tax liability for that period, then you may be able to carry over any unused credit amounts to future periods.
It's important to keep track of all of your expenses related to your business so that you can take full advantage of claiming input tax credits when filing your GST/HST returns. Input tax credits can help lower your business's overall taxes owed, so being aware of what is eligible and how to claim them can save you money in the long run. If you have any questions about input tax credits, it's best to contact a qualified professional who can provide advice specific to your situation.
We hope this post has given you a better understanding of what input tax credits are and how they can benefit your business. By claiming ITCs on expenses related to your business, you can reduce your GST/HST liability and save money in the process!